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Procera Networks Inc (NAS:PKT)
Beneish M-Score
4.63 (As of Today)

Warning Sign:

Beneish M-Score 4.63 higher than -2.22, which implies that it might have manipulated its financial results.

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.

Procera Networks Inc has a M-score of 4.63 signals that the company is a manipulator.

PKT' s 10-Year Beneish M-Score Range
Min: -10.06   Max: 5.85
Current: 4.63

-10.06
5.85

During the past 12 years, the highest Beneish M-Score of Procera Networks Inc was 5.85. The lowest was -10.06. And the median was -2.30.


Definition

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 Procera Networks Inc 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 * 1.2027+0.528 * 1.2322+0.404 * 18.1591+0.892 * 1.2523+0.115 * 0.5202
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.204+4.679 * -0.0305-0.327 * 1.3763
=4.63

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $25.01 Mil.
Revenue was 21.33 + 21.333 + 17.839 + 14.171 = $74.67 Mil.
Gross Profit was 12.363 + 10.357 + 10.725 + 7.369 = $40.81 Mil.
Total Current Assets was $152.54 Mil.
Total Assets was $179.44 Mil.
Property, Plant and Equipment(Net PPE) was $7.12 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.43 Mil.
Selling, General & Admin. Expense(SGA) was $41.29 Mil.
Total Current Liabilities was $25.66 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -3.302 + -2.983 + -3.282 + -6.717 = $-16.28 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.00 Mil.
Cash Flow from Operations was -0.052 + -1.539 + -4.632 + -4.58 = $-10.80 Mil.
Accounts Receivable was $16.60 Mil.
Revenue was 16.569 + 16.061 + 14.665 + 12.332 = $59.63 Mil.
Gross Profit was 10.727 + 11.521 + 9.247 + 8.663 = $40.16 Mil.
Total Current Assets was $161.55 Mil.
Total Assets was $167.04 Mil.
Property, Plant and Equipment(Net PPE) was $4.47 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.91 Mil.
Selling, General & Admin. Expense(SGA) was $27.38 Mil.
Total Current Liabilities was $17.36 Mil.
Long-Term Debt was $0.00 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(25.008 / 74.673) / (16.603 / 59.627)
=0.33490016 / 0.27844768
=1.2027

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(10.357 / 59.627) / (12.363 / 74.673)
=0.67348684 / 0.54656971
=1.2322

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (152.535 + 7.121) / 179.436) / (1 - (161.55 + 4.474) / 167.038)
=0.11023429 / 0.00607047
=18.1591

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=74.673 / 59.627
=1.2523

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))
=(0.91 / (0.91 + 4.474)) / (3.427 / (3.427 + 7.121))
=0.16901932 / 0.32489571
=0.5202

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)
=(41.287 / 74.673) / (27.382 / 59.627)
=0.55290399 / 0.45922149
=1.204

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 + 25.659) / 179.436) / ((0 + 17.355) / 167.038)
=0.14299806 / 0.10389851
=1.3763

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(-16.284 - 0 - -10.803) / 179.436
=-0.0305

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.

Procera Networks Inc has a M-score of 4.63 signals that the company is likely to be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Procera Networks Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 2.97460.44941.73650.9351.26820.45751.08431.2027
GMI -0.30981.04811.75030.89940.71790.95540.88021.2322
AQI 4.37430.78421.11250.29870.61380.40760.372618.1591
SGI 7.50593.48641.7271.74671.00962.18491.34281.2523
DEPI 2.7720.35980.58750.9492.36031.78731.16960.5202
SGAI 0.180.46680.62370.42640.91740.74171.14991.204
LVGI 0.1562.48232.05281.15970.91030.51530.49151.3763
TATA -0.1193-1.8719-0.1035-0.199-0.1158-0.0139-0.0109-0.0305
M-score 5.87-10.06-1.52-3.10-2.87-1.96-2.304.63

Procera Networks Inc Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.120.45750.44450.5730.82031.08431.25081.55841.03491.2027
GMI 0.87840.95540.94580.96280.93340.88020.97730.99551.1591.2322
AQI 0.36680.40760.37540.34370.34120.37267.687418.229619.611218.1591
SGI 1.63692.18482.07961.90141.61721.34281.23391.17911.19121.2523
DEPI 1.46751.78731.64721.24511.46351.16960.93270.70650.54240.5202
SGAI 0.8580.74180.85190.89321.02981.14981.22091.31451.26351.204
LVGI 0.51980.51530.51870.42810.52630.49150.47741.51121.15661.3763
TATA 0.0154-0.0139-0.0207-0.0055-0.0243-0.0109-0.00510.0115-0.0033-0.0305
M-score -1.81-1.96-2.15-2.15-2.31-2.300.754.955.164.63
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