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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 11 years, the highest Beneish M-Score of EchoStar Corp was 0.15. The lowest was -3.17. And the median was -2.81.
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 * 1.1006||+||0.528 * 0.9855||+||0.404 * 0.7779||+||0.892 * 0.9723||+||0.115 * 1.1273|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0601||+||4.679 * -0.072||-||0.327 * 1.2389|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $488 Mil.|
Revenue was 740.393 + 742.349 + 757.629 + 816.359 = $3,057 Mil.
Gross Profit was 333.782 + 327.742 + 327.266 + 332.334 = $1,321 Mil.
Total Current Assets was $3,723 Mil.
Total Assets was $9,009 Mil.
Property, Plant and Equipment(Net PPE) was $3,669 Mil.
Depreciation, Depletion and Amortization(DDA) was $495 Mil.
Selling, General & Admin. Expense(SGA) was $386 Mil.
Total Current Liabilities was $531 Mil.
Long-Term Debt was $3,623 Mil.
Net Income was 38.188 + 36.801 + 55.786 + 49.155 = $180 Mil.
Non Operating Income was -0.433 + 6.039 + 10.336 + 8.885 = $25 Mil.
Cash Flow from Operations was 228.634 + 219.075 + 162.785 + 192.849 = $803 Mil.
|Accounts Receivable was $456 Mil.
Revenue was 790.587 + 760.879 + 793.595 + 798.653 = $3,144 Mil.
Gross Profit was 338.393 + 333.204 + 337.207 + 330.19 = $1,339 Mil.
Total Current Assets was $2,134 Mil.
Total Assets was $7,209 Mil.
Property, Plant and Equipment(Net PPE) was $3,413 Mil.
Depreciation, Depletion and Amortization(DDA) was $528 Mil.
Selling, General & Admin. Expense(SGA) was $374 Mil.
Total Current Liabilities was $527 Mil.
Long-Term Debt was $2,157 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)|
|=||(488.403 / 3056.73)||/||(456.399 / 3143.714)|
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)|
|=||(1338.994 / 3143.714)||/||(1321.124 / 3056.73)|
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 - (3723.287 + 3669.303) / 9008.859)||/||(1 - (2133.659 + 3412.99) / 7209.486)|
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))|
|=||(528.158 / (528.158 + 3412.99))||/||(495.068 / (495.068 + 3669.303))|
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)|
|=||(385.634 / 3056.73)||/||(374.116 / 3143.714)|
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)|
|=||((3622.879 + 531.438) / 9008.859)||/||((2156.667 + 526.831) / 7209.486)|
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|
|=||(179.93 - 24.827||-||803.343)||/||9008.859|
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 -2.92 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