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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 13 years, the highest Beneish M-Score of RCM Technologies Inc was 7.01. The lowest was -6.59. And the median was -2.45.
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 * 1.1239||+||0.528 * 0.9851||+||0.404 * 1.2262||+||0.892 * 0.9574||+||0.115 * 1.0424|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0893||+||4.679 * -0.1659||-||0.327 * 1.1238|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $55.6 Mil.|
Revenue was 47.176 + 47.407 + 45.077 + 45.286 = $184.9 Mil.
Gross Profit was 12.676 + 13.69 + 12.802 + 12.09 = $51.3 Mil.
Total Current Assets was $59.2 Mil.
Total Assets was $76.2 Mil.
Property, Plant and Equipment(Net PPE) was $4.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.5 Mil.
Selling, General & Admin. Expense(SGA) was $42.4 Mil.
Total Current Liabilities was $21.8 Mil.
Long-Term Debt was $19.9 Mil.
Net Income was 1.001 + 2.976 + 0.962 + 0.689 = $5.6 Mil.
Non Operating Income was 0.012 + -0.132 + -0.061 + 0.011 = $-0.2 Mil.
Cash Flow from Operations was 1.054 + 4.993 + 9.963 + 2.434 = $18.4 Mil.
|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.
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)|
|=||(55.578 / 184.946)||/||(51.651 / 193.167)|
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)|
|=||(52.739 / 193.167)||/||(51.258 / 184.946)|
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 - (59.202 + 4.725) / 76.242)||/||(1 - (70.589 + 3.62) / 85.467)|
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))|
|=||(1.248 / (1.248 + 3.62))||/||(1.541 / (1.541 + 4.725))|
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)|
|=||(42.4 / 184.946)||/||(40.656 / 193.167)|
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)|
|=||((19.9 + 21.819) / 76.242)||/||((20 + 21.616) / 85.467)|
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|
|=||(5.628 - -0.17||-||18.444)||/||76.242|
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 -3.15 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
RCM Technologies Inc Annual Data
RCM Technologies Inc Quarterly Data