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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.
TeleCommunication Systems, Inc. has a M-score of -4.58 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of TeleCommunication Systems, Inc. was -0.15. The lowest was -4.58. And the median was -2.67.
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 TeleCommunication Systems, Inc. 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 * 0.7835||+||0.528 * 0.8569||+||0.404 * 1.0129||+||0.892 * 0.7433||+||0.115 * 0.844|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.3161||+||4.679 * -0.3203||-||0.327 * 1.0857|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $61.8 Mil.|
Revenue was 78.622 + 96.033 + 92.842 + 94.794 = $362.3 Mil.
Gross Profit was 31.797 + 35.783 + 35.907 + 35.481 = $139.0 Mil.
Total Current Assets was $148.9 Mil.
Total Assets was $321.5 Mil.
Property, Plant and Equipment(Net PPE) was $38.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $26.9 Mil.
Selling, General & Admin. Expense(SGA) was $83.2 Mil.
Total Current Liabilities was $93.7 Mil.
Long-Term Debt was $117.4 Mil.
Net Income was -55.742 + -0.155 + -1.871 + -0.829 = $-58.6 Mil.
Non Operating Income was -0.332 + -1.643 + -1.453 + -0.392 = $-3.8 Mil.
Cash Flow from Operations was 9.567 + 7.206 + 12.13 + 19.29 = $48.2 Mil.
|Accounts Receivable was $106.1 Mil.
Revenue was 132.671 + 140.056 + 114.622 + 100.035 = $487.4 Mil.
Gross Profit was 47.165 + 44.126 + 34.526 + 34.39 = $160.2 Mil.
Total Current Assets was $193.9 Mil.
Total Assets was $413.7 Mil.
Property, Plant and Equipment(Net PPE) was $49.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $26.3 Mil.
Selling, General & Admin. Expense(SGA) was $85.0 Mil.
Total Current Liabilities was $111.3 Mil.
Long-Term Debt was $138.9 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)|
|=||(61.798 / 362.291)||/||(106.108 / 487.384)|
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)|
|=||(35.783 / 487.384)||/||(31.797 / 362.291)|
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 - (148.882 + 38.355) / 321.455)||/||(1 - (193.897 + 49.27) / 413.712)|
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))|
|=||(26.279 / (26.279 + 49.27))||/||(26.889 / (26.889 + 38.355))|
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)|
|=||(83.184 / 362.291)||/||(85.03 / 487.384)|
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)|
|=||((117.384 + 93.704) / 321.455)||/||((138.939 + 111.293) / 413.712)|
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|
|=||(-58.597 - -3.82||-||48.193)||/||321.455|
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.
TeleCommunication Systems, Inc. has a M-score of -4.58 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
TeleCommunication Systems, Inc. Annual Data
TeleCommunication Systems, Inc. Quarterly Data