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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 10 years, the highest Beneish M-Score of PokerTek Inc was 43.19. The lowest was -6.01. And the median was -3.05.
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 PokerTek 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 * 0.69||+||0.528 * 1.0353||+||0.404 * 1.3541||+||0.892 * 0.8467||+||0.115 * 1.0025|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1354||+||4.679 * -0.2073||-||0.327 * 0.9817|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $0.42 Mil.|
Revenue was 0.951 + 1.115 + 1.408 + 1.143 = $4.62 Mil.
Gross Profit was 0.686 + 0.843 + 0.913 + 0.83 = $3.27 Mil.
Total Current Assets was $1.74 Mil.
Total Assets was $3.47 Mil.
Property, Plant and Equipment(Net PPE) was $0.03 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.68 Mil.
Selling, General & Admin. Expense(SGA) was $3.78 Mil.
Total Current Liabilities was $0.80 Mil.
Long-Term Debt was $0.13 Mil.
Net Income was -0.535 + -0.286 + -0.121 + -0.266 = $-1.21 Mil.
Non Operating Income was 0 + 0 + 0.058 + -0.018 = $0.04 Mil.
Cash Flow from Operations was -0.182 + 0.181 + -0.304 + -0.223 = $-0.53 Mil.
|Accounts Receivable was $0.72 Mil.
Revenue was 1.604 + 1.391 + 1.344 + 1.114 = $5.45 Mil.
Gross Profit was 1.238 + 1.038 + 0.936 + 0.789 = $4.00 Mil.
Total Current Assets was $3.09 Mil.
Total Assets was $4.90 Mil.
Property, Plant and Equipment(Net PPE) was $0.03 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.79 Mil.
Selling, General & Admin. Expense(SGA) was $3.93 Mil.
Total Current Liabilities was $1.14 Mil.
Long-Term Debt was $0.21 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)|
|=||(0.423 / 4.617)||/||(0.724 / 5.453)|
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)|
|=||(0.843 / 5.453)||/||(0.686 / 4.617)|
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 - (1.741 + 0.026) / 3.474)||/||(1 - (3.092 + 0.028) / 4.897)|
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))|
|=||(0.786 / (0.786 + 0.028))||/||(0.681 / (0.681 + 0.026))|
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)|
|=||(3.78 / 4.617)||/||(3.932 / 5.453)|
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)|
|=||((0.132 + 0.804) / 3.474)||/||((0.207 + 1.137) / 4.897)|
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|
|=||(-1.208 - 0.04||-||-0.528)||/||3.474|
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.
PokerTek Inc has a M-score of -3.73 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
PokerTek Inc Annual Data
PokerTek Inc Quarterly Data