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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.
Richardson Electronics has a M-score of -2.59 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Richardson Electronics was 3.98. The lowest was -3.86. And the median was -2.44.
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 Richardson Electronics 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 * 0.9572||+||0.528 * 0.9816||+||0.404 * 1.4375||+||0.892 * 0.9909||+||0.115 * 1.1227|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0859||+||4.679 * -0.0425||-||0.327 * 1.093|
|This Year (Aug14) TTM:||Last Year (Aug13) TTM:|
|Accounts Receivable was $18.5 Mil.|
Revenue was 34.699 + 35.383 + 32.884 + 35.436 = $138.4 Mil.
Gross Profit was 10.658 + 10.164 + 9.651 + 11.007 = $41.5 Mil.
Total Current Assets was $181.9 Mil.
Total Assets was $200.9 Mil.
Property, Plant and Equipment(Net PPE) was $7.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.2 Mil.
Selling, General & Admin. Expense(SGA) was $44.6 Mil.
Total Current Liabilities was $20.8 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -0.083 + -2.475 + -0.532 + 0.524 = $-2.6 Mil.
Non Operating Income was 0.059 + 0.023 + 0.422 + -0.001 = $0.5 Mil.
Cash Flow from Operations was -0.328 + 6.05 + -0.501 + 0.249 = $5.5 Mil.
|Accounts Receivable was $19.5 Mil.
Revenue was 34.257 + 35.183 + 33.63 + 36.603 = $139.7 Mil.
Gross Profit was 10.192 + 10.247 + 9.91 + 10.742 = $41.1 Mil.
Total Current Assets was $194.1 Mil.
Total Assets was $207.8 Mil.
Property, Plant and Equipment(Net PPE) was $5.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.0 Mil.
Selling, General & Admin. Expense(SGA) was $41.5 Mil.
Total Current Liabilities was $19.7 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)|
|=||(18.494 / 138.402)||/||(19.499 / 139.673)|
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)|
|=||(10.164 / 139.673)||/||(10.658 / 138.402)|
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 - (181.879 + 7.723) / 200.905)||/||(1 - (194.067 + 5.6) / 207.8)|
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))|
|=||(1.006 / (1.006 + 5.6))||/||(1.212 / (1.212 + 7.723))|
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)|
|=||(44.609 / 138.402)||/||(41.456 / 139.673)|
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 + 20.826) / 200.905)||/||((0 + 19.708) / 207.8)|
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|
|=||(-2.566 - 0.503||-||5.47)||/||200.905|
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.
Richardson Electronics has a M-score of -2.59 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
Richardson Electronics Annual Data
Richardson Electronics Quarterly Data