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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 -2.24. The lowest was -3.17. And the median was -2.94.
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 * 0.7683||+||0.528 * 0.8568||+||0.404 * 0.8888||+||0.892 * 1.0497||+||0.115 * 1.1192|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9886||+||4.679 * -0.0965||-||0.327 * 0.9025|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $415 Mil.|
Revenue was 843.887 + 895.84 + 879.828 + 826.023 = $3,446 Mil.
Gross Profit was 340.836 + 343.383 + 338.183 + 295.26 = $1,318 Mil.
Total Current Assets was $2,328 Mil.
Total Assets was $7,254 Mil.
Property, Plant and Equipment(Net PPE) was $3,195 Mil.
Depreciation, Depletion and Amortization(DDA) was $557 Mil.
Selling, General & Admin. Expense(SGA) was $372 Mil.
Total Current Liabilities was $518 Mil.
Long-Term Debt was $2,326 Mil.
Net Income was 49.847 + 60.168 + 30.805 + 12.055 = $153 Mil.
Non Operating Income was 3.396 + 11.686 + -1.405 + -1.187 = $12 Mil.
Cash Flow from Operations was 177.697 + 290.46 + 170.502 + 201.472 = $840 Mil.
|Accounts Receivable was $514 Mil.
Revenue was 808.087 + 848.908 + 830.003 + 795.454 = $3,282 Mil.
Gross Profit was 270.638 + 266.975 + 275.636 + 262.305 = $1,076 Mil.
Total Current Assets was $2,356 Mil.
Total Assets was $6,702 Mil.
Property, Plant and Equipment(Net PPE) was $2,546 Mil.
Depreciation, Depletion and Amortization(DDA) was $507 Mil.
Selling, General & Admin. Expense(SGA) was $358 Mil.
Total Current Liabilities was $558 Mil.
Long-Term Debt was $2,353 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)|
|=||(414.901 / 3445.578)||/||(514.427 / 3282.452)|
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)|
|=||(343.383 / 3282.452)||/||(340.836 / 3445.578)|
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 - (2328.091 + 3194.793) / 7253.998)||/||(1 - (2356.126 + 2546.377) / 6701.963)|
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))|
|=||(507.111 / (507.111 + 2546.377))||/||(556.676 / (556.676 + 3194.793))|
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)|
|=||(372.01 / 3445.578)||/||(358.499 / 3282.452)|
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)|
|=||((2325.775 + 517.733) / 7253.998)||/||((2352.597 + 558.445) / 6701.963)|
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|
|=||(152.875 - 12.49||-||840.131)||/||7253.998|
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 -3.17 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