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RCM Technologies Inc (NAS:RCMT)
Beneish M-Score
7.01 (As of Today)

Warning Sign:

Beneish M-Score 7.01 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.

RCM Technologies Inc has a M-score of 7.01 signals that the company is a manipulator.

RCMT' s 10-Year Beneish M-Score Range
Min: -6.59   Max: 7.01
Current: 7.01

-6.59
7.01

During the past 13 years, the highest Beneish M-Score of RCM Technologies Inc was 7.01. The lowest was -6.59. And the median was -2.39.


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 RCM Technologies 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 * 11.1669+0.528 * 0.9459+0.404 * 1.0236+0.892 * 1.0845+0.115 * 1.2076
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8967+4.679 * 0.0553-0.327 * 1.6874
=7.01

* 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 $51.7 Mil.
Revenue was 47.966 + 49.31 + 46.382 + 49.509 = $193.2 Mil.
Gross Profit was 13.303 + 13.32 + 13.161 + 12.955 = $52.7 Mil.
Total Current Assets was $70.6 Mil.
Total Assets was $85.5 Mil.
Property, Plant and Equipment(Net PPE) was $3.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.2 Mil.
Selling, General & Admin. Expense(SGA) was $40.7 Mil.
Total Current Liabilities was $21.6 Mil.
Long-Term Debt was $20.0 Mil.
Net Income was 1.388 + 1.717 + 1.877 + 2.017 = $7.0 Mil.
Non Operating Income was -0.011 + 0.131 + 0.025 + 0.049 = $0.2 Mil.
Cash Flow from Operations was -4.909 + 2.997 + -2.723 + 6.714 = $2.1 Mil.
Accounts Receivable was $4.3 Mil.
Revenue was 48.569 + 45.849 + 41.32 + 42.379 = $178.1 Mil.
Gross Profit was 12.257 + 11.794 + 10.684 + 11.262 = $46.0 Mil.
Total Current Assets was $74.7 Mil.
Total Assets was $88.6 Mil.
Property, Plant and Equipment(Net PPE) was $2.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.1 Mil.
Selling, General & Admin. Expense(SGA) was $41.8 Mil.
Total Current Liabilities was $25.6 Mil.
Long-Term Debt was $0.0 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)
=(51.651 / 193.167) / (4.265 / 178.117)
=0.26739039 / 0.02394494
=11.1669

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)
=(13.32 / 178.117) / (13.303 / 193.167)
=0.25824037 / 0.27302282
=0.9459

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 - (70.589 + 3.62) / 85.467) / (1 - (74.737 + 2.482) / 88.624)
=0.13172336 / 0.12868975
=1.0236

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
=193.167 / 178.117
=1.0845

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))
=(1.113 / (1.113 + 2.482)) / (1.248 / (1.248 + 3.62))
=0.30959666 / 0.25636812
=1.2076

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)
=(40.656 / 193.167) / (41.805 / 178.117)
=0.21047073 / 0.23470528
=0.8967

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)
=((20 + 21.616) / 85.467) / ((0 + 25.574) / 88.624)
=0.48692478 / 0.28856743
=1.6874

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
=(6.999 - 0.194 - 2.079) / 85.467
=0.0553

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.

RCM Technologies Inc has a M-score of 7.01 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.

RCM Technologies Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.03880.95840.89031.25550.96650.98760.73821.29291.24890.9894
GMI 1.02430.94471.01140.95890.9940.91021.00641.041.04850.9737
AQI 0.99951.10931.00540.361.04940.87950.90131.20610.91420.9801
SGI 1.0671.11791.06090.9770.82060.94350.88761.01391.17121.1346
DEPI 0.93710.90271.00160.94851.01950.89260.94790.75581.26371.2216
SGAI 0.96811.04040.94661.15081.06010.93741.02451.0041.04770.8657
LVGI 0.98270.57160.96761.85040.59430.89521.04611.78770.96451.7486
TATA -0.00070.0078-0.0247-0.443-0.2484-0.0912-0.0249-0.00570.06580.0284
M-score -2.37-2.24-2.61-4.93-3.69-3.03-3.00-2.41-1.77-2.45

RCM Technologies Inc Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 1.29290.87431.06461.37431.24890.09591.11631.09090.989411.1669
GMI 1.041.03651.02541.04891.04851.0421.04080.99940.97370.9459
AQI 1.20611.20051.24160.91730.91420.91450.84220.96050.98011.0236
SGI 1.01391.03861.09061.1261.17121.19671.19161.17511.13461.0845
DEPI 0.75580.8040.90541.10691.26371.2941.42191.38481.22161.2076
SGAI 1.0041.01220.98240.96151.04771.03441.02171.05650.86570.8967
LVGI 1.78771.74211.20341.47170.96450.96231.1630.9371.74861.6874
TATA -0.00560.02960.06160.08390.06580.10110.02610.07270.02840.0553
M-score -2.41-2.59-2.01-1.77-1.77-2.64-2.13-1.86-2.457.01
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