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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 10 years, the highest Beneish M-Score of EchoStar Corp was 4.29. The lowest was -3.99. And the median was -2.87.
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 * 1.2354||+||0.528 * 0.9524||+||0.404 * 0.925||+||0.892 * 0.938||+||0.115 * 1.1389|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.066||+||4.679 * -0.0769||-||0.327 * 0.9591|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $497 Mil.|
Revenue was 757.629 + 816.359 + 790.587 + 760.879 = $3,125 Mil.
Gross Profit was 327.266 + 332.334 + 338.393 + 333.204 = $1,331 Mil.
Total Current Assets was $2,146 Mil.
Total Assets was $7,361 Mil.
Property, Plant and Equipment(Net PPE) was $3,569 Mil.
Depreciation, Depletion and Amortization(DDA) was $510 Mil.
Selling, General & Admin. Expense(SGA) was $385 Mil.
Total Current Liabilities was $499 Mil.
Long-Term Debt was $2,144 Mil.
Net Income was 55.786 + 49.155 + 63.374 + 28.835 = $197 Mil.
Non Operating Income was 10.336 + 8.885 + 0.286 + -5.364 = $14 Mil.
Cash Flow from Operations was 162.785 + 192.849 + 168.528 + 225.179 = $749 Mil.
|Accounts Receivable was $429 Mil.
Revenue was 793.595 + 798.653 + 843.887 + 895.84 = $3,332 Mil.
Gross Profit was 337.207 + 330.19 + 340.836 + 343.383 = $1,352 Mil.
Total Current Assets was $2,179 Mil.
Total Assets was $7,233 Mil.
Property, Plant and Equipment(Net PPE) was $3,305 Mil.
Depreciation, Depletion and Amortization(DDA) was $548 Mil.
Selling, General & Admin. Expense(SGA) was $385 Mil.
Total Current Liabilities was $506 Mil.
Long-Term Debt was $2,202 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)|
|=||(497.019 / 3125.454)||/||(428.893 / 3331.975)|
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)|
|=||(1351.616 / 3331.975)||/||(1331.197 / 3125.454)|
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 - (2145.858 + 3569.168) / 7361.393)||/||(1 - (2179.477 + 3304.87) / 7233.133)|
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))|
|=||(548.458 / (548.458 + 3304.87))||/||(509.742 / (509.742 + 3569.168))|
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)|
|=||(384.89 / 3125.454)||/||(384.921 / 3331.975)|
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)|
|=||((2144.479 + 499.43) / 7361.393)||/||((2202.337 + 506.224) / 7233.133)|
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|
|=||(197.15 - 14.143||-||749.341)||/||7361.393|
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 -2.72 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