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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 9 years, the highest Beneish M-Score of EchoStar Corp was 0.15. The lowest was -3.87. And the median was -2.90.
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 EchoStar Corp 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 * 0.9311||+||0.528 * 0.8719||+||0.404 * 0.9756||+||0.892 * 0.9376||+||0.115 * 1.0739|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1266||+||4.679 * -0.0859||-||0.327 * 0.9316|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $425 Mil.|
Revenue was 760.879 + 793.595 + 798.653 + 843.887 = $3,197 Mil.
Gross Profit was 333.204 + 337.207 + 330.19 + 340.836 = $1,341 Mil.
Total Current Assets was $2,258 Mil.
Total Assets was $7,289 Mil.
Property, Plant and Equipment(Net PPE) was $3,320 Mil.
Depreciation, Depletion and Amortization(DDA) was $539 Mil.
Selling, General & Admin. Expense(SGA) was $381 Mil.
Total Current Liabilities was $543 Mil.
Long-Term Debt was $2,196 Mil.
Net Income was 28.835 + 31.75 + 29.398 + 49.847 = $140 Mil.
Non Operating Income was -5.364 + -15.237 + -2.509 + 3.396 = $-20 Mil.
Cash Flow from Operations was 225.179 + 161.182 + 221.562 + 177.697 = $786 Mil.
|Accounts Receivable was $487 Mil.
Revenue was 895.84 + 879.828 + 826.023 + 808.087 = $3,410 Mil.
Gross Profit was 343.383 + 338.183 + 295.26 + 270.638 = $1,247 Mil.
Total Current Assets was $2,472 Mil.
Total Assets was $7,313 Mil.
Property, Plant and Equipment(Net PPE) was $3,081 Mil.
Depreciation, Depletion and Amortization(DDA) was $544 Mil.
Selling, General & Admin. Expense(SGA) was $361 Mil.
Total Current Liabilities was $617 Mil.
Long-Term Debt was $2,333 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)|
|=||(425.006 / 3197.014)||/||(486.859 / 3409.778)|
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)|
|=||(337.207 / 3409.778)||/||(333.204 / 3197.014)|
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 - (2257.653 + 3320.222) / 7289.143)||/||(1 - (2471.965 + 3080.911) / 7312.681)|
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))|
|=||(543.693 / (543.693 + 3080.911))||/||(539.056 / (539.056 + 3320.222))|
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)|
|=||(381.221 / 3197.014)||/||(360.889 / 3409.778)|
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)|
|=||((2195.985 + 542.865) / 7289.143)||/||((2332.73 + 616.72) / 7312.681)|
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|
|=||(139.83 - -19.714||-||785.62)||/||7289.143|
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.
EchoStar Corp has a M-score of -3.07 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
EchoStar Corp Annual Data
EchoStar Corp Quarterly Data