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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
Orbit International Corp has a M-score of -4.24 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Orbit International Corp was 2.30. The lowest was -4.68. And the median was -2.46.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Orbit International Corp for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 1.0204||+||0.528 * 1.1089||+||0.404 * 0.4506||+||0.892 * 0.7872||+||0.115 * 0.4377|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2553||+||4.679 * -0.2847||-||0.327 * 0.9607|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $3.27 Mil.|
Revenue was 5.007 + 5.807 + 6.109 + 6.475 = $23.40 Mil.
Gross Profit was 1.5 + 1.989 + 2.366 + 2.497 = $8.35 Mil.
Total Current Assets was $17.02 Mil.
Total Assets was $18.69 Mil.
Property, Plant and Equipment(Net PPE) was $0.76 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.64 Mil.
Selling, General & Admin. Expense(SGA) was $9.55 Mil.
Total Current Liabilities was $1.95 Mil.
Long-Term Debt was $1.97 Mil.
Net Income was -1.062 + -2.726 + 0.127 + 0.109 = $-3.55 Mil.
Non Operating Income was 0.01 + 0.011 + 0.006 + 0.002 = $0.03 Mil.
Cash Flow from Operations was -0.855 + 1.348 + 1.178 + 0.068 = $1.74 Mil.
|Accounts Receivable was $4.07 Mil.
Revenue was 6.447 + 7.903 + 7.864 + 7.509 = $29.72 Mil.
Gross Profit was 2.491 + 3.381 + 3.059 + 2.834 = $11.77 Mil.
Total Current Assets was $20.20 Mil.
Total Assets was $23.94 Mil.
Property, Plant and Equipment(Net PPE) was $1.16 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.29 Mil.
Selling, General & Admin. Expense(SGA) was $9.67 Mil.
Total Current Liabilities was $5.23 Mil.
Long-Term Debt was $0.00 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(3.267 / 23.398)||/||(4.067 / 29.723)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(1.989 / 29.723)||/||(1.5 / 23.398)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (17.016 + 0.761) / 18.685)||/||(1 - (20.2 + 1.159) / 23.941)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(0.29 / (0.29 + 1.159))||/||(0.641 / (0.641 + 0.761))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(9.552 / 23.398)||/||(9.666 / 29.723)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((1.97 + 1.95) / 18.685)||/||((0 + 5.228) / 23.941)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(-3.552 - 0.029||-||1.739)||/||18.685|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Orbit International Corp has a M-score of -4.24 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Orbit International Corp Annual Data
Orbit International Corp Quarterly Data