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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.
RCM Technologies Inc has a M-score of -2.04 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of RCM Technologies Inc was -0.81. The lowest was -4.97. And the median was -2.37.
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 * 0.9486||+||0.528 * 1.0485||+||0.404 * 0.9142||+||0.892 * 1.1712||+||0.115 * 1.2637|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0477||+||4.679 * 0.0658||-||0.327 * 0.9645|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $59.7 Mil.|
Revenue was 45.849 + 41.32 + 42.379 + 41.23 = $170.8 Mil.
Gross Profit was 11.794 + 10.684 + 11.262 + 10.621 = $44.4 Mil.
Total Current Assets was $72.7 Mil.
Total Assets was $86.5 Mil.
Property, Plant and Equipment(Net PPE) was $2.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.1 Mil.
Selling, General & Admin. Expense(SGA) was $40.7 Mil.
Total Current Liabilities was $24.7 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -1.582 + 1.142 + 1.47 + 0.96 = $2.0 Mil.
Non Operating Income was -0.023 + 0.01 + 0.003 + 0.097 = $0.1 Mil.
Cash Flow from Operations was -4.532 + 0.942 + -0.275 + 0.073 = $-3.8 Mil.
|Accounts Receivable was $53.7 Mil.
Revenue was 37.019 + 34.839 + 35.753 + 38.206 = $145.8 Mil.
Gross Profit was 10.099 + 9.675 + 9.656 + 10.285 = $39.7 Mil.
Total Current Assets was $70.3 Mil.
Total Assets was $84.5 Mil.
Property, Plant and Equipment(Net PPE) was $1.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.3 Mil.
Selling, General & Admin. Expense(SGA) was $33.2 Mil.
Total Current Liabilities was $25.1 Mil.
Long-Term Debt was $0.0 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)|
|=||(59.679 / 170.778)||/||(53.716 / 145.817)|
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)|
|=||(10.684 / 145.817)||/||(11.794 / 170.778)|
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 - (72.704 + 2.291) / 86.524)||/||(1 - (70.345 + 1.88) / 84.548)|
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))|
|=||(1.321 / (1.321 + 1.88))||/||(1.111 / (1.111 + 2.291))|
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)|
|=||(40.695 / 170.778)||/||(33.166 / 145.817)|
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 + 24.739) / 86.524)||/||((0 + 25.063) / 84.548)|
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|
|=||(1.99 - 0.087||-||-3.792)||/||86.524|
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 -2.04 signals that the company is likely to 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
RCM Technologies Inc Annual Data
RCM Technologies Inc Quarterly Data