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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 12 years, the highest Beneish M-Score of Procera Networks Inc was 39.51. The lowest was -13.61. And the median was -2.31.
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 * 0.9463||+||0.528 * 0.9525||+||0.404 * 0.2878||+||0.892 * 1.0383||+||0.115 * 0.9464|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9867||+||4.679 * -0.1546||-||0.327 * 1.1738|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $19.94 Mil.|
Revenue was 16.109 + 20.608 + 14.541 + 21.33 = $72.59 Mil.
Gross Profit was 10.217 + 11.743 + 8.384 + 12.363 = $42.71 Mil.
Total Current Assets was $141.38 Mil.
Total Assets was $154.25 Mil.
Property, Plant and Equipment(Net PPE) was $7.60 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.79 Mil.
Selling, General & Admin. Expense(SGA) was $39.23 Mil.
Total Current Liabilities was $21.45 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -15.712 + -1.408 + -5.976 + -3.302 = $-26.40 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.00 Mil.
Cash Flow from Operations was -4.259 + 1.289 + 0.475 + -0.052 = $-2.55 Mil.
|Accounts Receivable was $20.30 Mil.
Revenue was 21.333 + 17.839 + 14.171 + 16.569 = $69.91 Mil.
Gross Profit was 10.357 + 10.725 + 7.369 + 10.727 = $39.18 Mil.
Total Current Assets was $149.48 Mil.
Total Assets was $176.64 Mil.
Property, Plant and Equipment(Net PPE) was $6.20 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.84 Mil.
Selling, General & Admin. Expense(SGA) was $38.30 Mil.
Total Current Liabilities was $20.92 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)|
|=||(19.941 / 72.588)||/||(20.295 / 69.912)|
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)|
|=||(11.743 / 69.912)||/||(10.217 / 72.588)|
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 - (141.378 + 7.603) / 154.247)||/||(1 - (149.482 + 6.197) / 176.635)|
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))|
|=||(2.844 / (2.844 + 6.197))||/||(3.785 / (3.785 + 7.603))|
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)|
|=||(39.233 / 72.588)||/||(38.296 / 69.912)|
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 + 21.446) / 154.247)||/||((0 + 20.922) / 176.635)|
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|
|=||(-26.398 - 0||-||-2.547)||/||154.247|
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 -3.59 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