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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 -6.58. 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 * 0.8392||+||0.528 * 0.9602||+||0.404 * 1.2204||+||0.892 * 0.986||+||0.115 * 1.1253|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9779||+||4.679 * -0.071||-||0.327 * 1.5966|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|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.
Net Income was 0.962 + 0.689 + 1.388 + 1.717 = $4.8 Mil.
Non Operating Income was -0.061 + 0.011 + -0.011 + 0.131 = $0.1 Mil.
Cash Flow from Operations was 9.963 + 2.434 + -4.909 + 2.997 = $10.5 Mil.
|Accounts Receivable was $52.0 Mil.
Revenue was 46.382 + 49.509 + 48.569 + 45.849 = $190.3 Mil.
Gross Profit was 13.161 + 12.955 + 12.257 + 11.794 = $50.2 Mil.
Total Current Assets was $79.1 Mil.
Total Assets was $94.3 Mil.
Property, Plant and Equipment(Net PPE) was $3.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.2 Mil.
Selling, General & Admin. Expense(SGA) was $43.6 Mil.
Total Current Liabilities was $26.1 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)|
|=||(42.989 / 187.639)||/||(51.955 / 190.309)|
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)|
|=||(12.09 / 190.309)||/||(12.802 / 187.639)|
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 - (64.328 + 4.833) / 81.674)||/||(1 - (79.052 + 3.445) / 94.34)|
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))|
|=||(1.167 / (1.167 + 3.445))||/||(1.402 / (1.402 + 4.833))|
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)|
|=||(42.02 / 187.639)||/||(43.583 / 190.309)|
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)|
|=||((15 + 21.068) / 81.674)||/||((0 + 26.094) / 94.34)|
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|
|=||(4.756 - 0.07||-||10.485)||/||81.674|
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 -3.08 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