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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.
During the past 13 years, the highest Beneish M-Score of Orbit International Corp was 2.30. The lowest was -4.96. And the median was -2.48.
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 * 1.634||+||0.528 * 0.9059||+||0.404 * 0.9814||+||0.892 * 1.0874||+||0.115 * 0.98|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.7132||+||4.679 * 0.1211||-||0.327 * 0.9285|
|This Year (Jun16) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $3.36 Mil.|
Revenue was 4.919 + 5.518 + 5.217 + 5.181 = $20.84 Mil.
Gross Profit was 1.653 + 2.298 + 1.955 + 2.03 = $7.94 Mil.
Total Current Assets was $16.26 Mil.
Total Assets was $17.50 Mil.
Property, Plant and Equipment(Net PPE) was $0.33 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.23 Mil.
Selling, General & Admin. Expense(SGA) was $6.65 Mil.
Total Current Liabilities was $1.96 Mil.
Long-Term Debt was $1.18 Mil.
Net Income was 0.074 + 0.583 + 0.314 + 0.331 = $1.30 Mil.
Non Operating Income was 0.004 + 0.011 + 0.005 + 0.004 = $0.02 Mil.
Cash Flow from Operations was -1.357 + 1.607 + -0.278 + -0.813 = $-0.84 Mil.
|Accounts Receivable was $1.89 Mil.
Revenue was 3.957 + 4.8 + 5.396 + 5.007 = $19.16 Mil.
Gross Profit was 1.111 + 1.763 + 2.237 + 1.5 = $6.61 Mil.
Total Current Assets was $15.63 Mil.
Total Assets was $17.17 Mil.
Property, Plant and Equipment(Net PPE) was $0.64 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.44 Mil.
Selling, General & Admin. Expense(SGA) was $8.58 Mil.
Total Current Liabilities was $3.32 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)|
|=||(3.36 / 20.835)||/||(1.891 / 19.16)|
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)|
|=||(6.611 / 19.16)||/||(7.936 / 20.835)|
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 - (16.264 + 0.328) / 17.5)||/||(1 - (15.625 + 0.641) / 17.174)|
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))|
|=||(0.44 / (0.44 + 0.641))||/||(0.233 / (0.233 + 0.328))|
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)|
|=||(6.65 / 20.835)||/||(8.575 / 19.16)|
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)|
|=||((1.18 + 1.961) / 17.5)||/||((0 + 3.32) / 17.174)|
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|
|=||(1.302 - 0.024||-||-0.841)||/||17.5|
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 -1.24 signals that the company is likely to 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