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GuruFocus has detected 3 Warning Signs with RCM Technologies Inc $RCMT.
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RCM Technologies Inc (NAS:RCMT)
Beneish M-Score
-3.21 (As of Today)

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 -3.21 suggests that the company is not a manipulator.

RCMT' s Beneish M-Score Range Over the Past 10 Years
Min: -6.59   Max: 7.01
Current: -3.21

-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 -2.50.


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 * 1.1285+0.528 * 1.0146+0.404 * 1.1962+0.892 * 0.9575+0.115 * 0.847
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0167+4.679 * -0.1828-0.327 * 1.0694
=-3.21

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $46.4 Mil.
Revenue was 39.695 + 45.379 + 47.176 + 47.407 = $179.7 Mil.
Gross Profit was 10.144 + 12.104 + 12.676 + 13.69 = $48.6 Mil.
Total Current Assets was $49.5 Mil.
Total Assets was $65.9 Mil.
Property, Plant and Equipment(Net PPE) was $4.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.6 Mil.
Selling, General & Admin. Expense(SGA) was $40.9 Mil.
Total Current Liabilities was $20.0 Mil.
Long-Term Debt was $11.2 Mil.
Net Income was 0.11 + 0.863 + 1.001 + 2.976 = $5.0 Mil.
Non Operating Income was -0.014 + 0.011 + 0.012 + -0.132 = $-0.1 Mil.
Cash Flow from Operations was 4.447 + 6.627 + 1.054 + 4.993 = $17.1 Mil.
Accounts Receivable was $43.0 Mil.
Revenue was 45.077 + 45.286 + 47.966 + 49.31 = $187.6 Mil.
Gross Profit was 12.802 + 12.09 + 13.303 + 13.32 = $51.5 Mil.
Total Current Assets was $64.3 Mil.
Total Assets was $81.7 Mil.
Property, Plant and Equipment(Net PPE) was $4.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.4 Mil.
Selling, General & Admin. Expense(SGA) was $42.0 Mil.
Total Current Liabilities was $21.1 Mil.
Long-Term Debt was $15.0 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)
=(46.448 / 179.657) / (42.989 / 187.639)
=0.2585371 / 0.22910482
=1.1285

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)
=(51.515 / 187.639) / (48.614 / 179.657)
=0.27454314 / 0.27059341
=1.0146

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 - (49.5 + 4.316) / 65.892) / (1 - (64.328 + 4.833) / 81.674)
=0.18326959 / 0.15320665
=1.1962

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
=179.657 / 187.639
=0.9575

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))
=(1.402 / (1.402 + 4.833)) / (1.56 / (1.56 + 4.316))
=0.22485966 / 0.26548673
=0.847

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)
=(40.903 / 179.657) / (42.02 / 187.639)
=0.22767273 / 0.22394065
=1.0167

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)
=((11.151 + 19.968) / 65.892) / ((15 + 21.068) / 81.674)
=0.47227281 / 0.44160932
=1.0694

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
=(4.95 - -0.123 - 17.121) / 65.892
=-0.1828

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 -3.21 suggests that the company will not 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 local exchange's currency.

RCM Technologies Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.95840.89031.25550.96650.98760.73821.29291.24890.98940.9599
GMI 0.94471.01140.95890.9940.91021.00641.041.04850.97370.955
AQI 1.10931.00540.361.04940.87950.90131.20610.91420.98011.14
SGI 1.11791.06090.9770.82060.94350.88761.01391.17121.13460.9585
DEPI 0.90271.00160.94851.01950.89260.94790.75581.26371.22161.1235
SGAI 1.04040.94661.15081.06010.93741.02451.0041.04770.86571.111
LVGI 0.57160.96761.85040.59430.89521.04611.78770.96451.74861.1774
TATA 0.0078-0.0247-0.443-0.2495-0.0912-0.0249-0.00570.06580.0285-0.0771
M-score -2.24-2.61-4.93-3.70-3.03-3.00-2.41-1.77-2.45-2.94

RCM Technologies Inc Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 1.11631.09090.989411.16691.23170.83920.95991.12390.6911.1285
GMI 1.04080.99940.97370.94590.93770.96020.9550.98510.99081.0146
AQI 0.84220.96050.98011.02361.08881.22041.141.22621.32961.1962
SGI 1.19161.17511.13461.08451.020.9860.95850.95740.97930.9575
DEPI 1.42191.38481.22161.20760.99981.12531.12351.04241.0130.847
SGAI 1.02171.05650.86570.89670.96550.97791.1111.08931.03291.0167
LVGI 1.1630.9371.74861.68741.53131.59661.17741.12381.06181.0694
TATA 0.02610.07270.02850.05550.0902-0.0708-0.0771-0.1659-0.2356-0.1828
M-score -2.13-1.86-2.457.01-1.99-3.08-2.94-3.15-3.78-3.21
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