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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 -4.68 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 -4.36. And the median was -2.41.
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 * 0.6577||+||0.528 * 1.0531||+||0.404 * 0.4084||+||0.892 * 0.8437||+||0.115 * 0.6449|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0349||+||4.679 * -0.3331||-||0.327 * 0.7896|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $2.98 Mil.|
Revenue was 5.807 + 6.109 + 6.475 + 6.447 = $24.84 Mil.
Gross Profit was 1.989 + 2.366 + 2.497 + 2.491 = $9.34 Mil.
Total Current Assets was $17.85 Mil.
Total Assets was $19.73 Mil.
Property, Plant and Equipment(Net PPE) was $0.98 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.46 Mil.
Selling, General & Admin. Expense(SGA) was $9.54 Mil.
Total Current Liabilities was $3.84 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -2.726 + 0.127 + 0.109 + -0.08 = $-2.57 Mil.
Non Operating Income was 0.011 + 0.006 + 0 + 0 = $0.02 Mil.
Cash Flow from Operations was 1.348 + 1.178 + 0.068 + 1.391 = $3.99 Mil.
|Accounts Receivable was $5.37 Mil.
Revenue was 7.903 + 7.864 + 7.509 + 6.162 = $29.44 Mil.
Gross Profit was 3.381 + 3.059 + 2.834 + 2.387 = $11.66 Mil.
Total Current Assets was $21.08 Mil.
Total Assets was $24.98 Mil.
Property, Plant and Equipment(Net PPE) was $1.10 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.29 Mil.
Selling, General & Admin. Expense(SGA) was $10.93 Mil.
Total Current Liabilities was $6.14 Mil.
Long-Term Debt was $0.01 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)|
|=||(2.981 / 24.838)||/||(5.372 / 29.438)|
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)|
|=||(2.366 / 29.438)||/||(1.989 / 24.838)|
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 - (17.853 + 0.975) / 19.731)||/||(1 - (21.078 + 1.099) / 24.976)|
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))|
|=||(0.288 / (0.288 + 1.099))||/||(0.463 / (0.463 + 0.975))|
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)|
|=||(9.54 / 24.838)||/||(10.926 / 29.438)|
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)|
|=||((0 + 3.837) / 19.731)||/||((0.008 + 6.143) / 24.976)|
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|
|=||(-2.57 - 0.017||-||3.985)||/||19.731|
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 -4.68 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