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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 Procera Networks Inc was 39.51. The lowest was -13.61. And the median was -2.49.
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 * 1.0952||+||0.528 * 0.9463||+||0.404 * 0.2096||+||0.892 * 1.0844||+||0.115 * 0.9227|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9209||+||4.679 * -0.1684||-||0.327 * 1.2761|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $15.40 Mil.|
Revenue was 20.503 + 24.155 + 16.109 + 20.608 = $81.38 Mil.
Gross Profit was 12.11 + 13.862 + 10.217 + 11.743 = $47.93 Mil.
Total Current Assets was $142.09 Mil.
Total Assets was $152.86 Mil.
Property, Plant and Equipment(Net PPE) was $7.17 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.76 Mil.
Selling, General & Admin. Expense(SGA) was $40.96 Mil.
Total Current Liabilities was $23.24 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -3.299 + -1.72 + -15.712 + -1.408 = $-22.14 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.00 Mil.
Cash Flow from Operations was 5.467 + 1.102 + -4.259 + 1.289 = $3.60 Mil.
|Accounts Receivable was $12.97 Mil.
Revenue was 14.541 + 21.33 + 21.333 + 17.839 = $75.04 Mil.
Gross Profit was 8.384 + 12.363 + 10.357 + 10.725 = $41.83 Mil.
Total Current Assets was $141.59 Mil.
Total Assets was $168.13 Mil.
Property, Plant and Equipment(Net PPE) was $7.66 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.56 Mil.
Selling, General & Admin. Expense(SGA) was $41.02 Mil.
Total Current Liabilities was $20.03 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)|
|=||(15.397 / 81.375)||/||(12.965 / 75.043)|
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)|
|=||(13.862 / 75.043)||/||(12.11 / 81.375)|
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 - (142.091 + 7.172) / 152.861)||/||(1 - (141.592 + 7.658) / 168.127)|
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))|
|=||(3.56 / (3.56 + 7.658))||/||(3.76 / (3.76 + 7.172))|
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)|
|=||(40.959 / 81.375)||/||(41.016 / 75.043)|
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 + 23.237) / 152.861)||/||((0 + 20.028) / 168.127)|
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|
|=||(-22.139 - 0||-||3.599)||/||152.861|
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 -3.54 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
Procera Networks Inc Annual Data
Procera Networks Inc Quarterly Data