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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 13 years, the highest Beneish M-Score of TeleCommunication Systems Inc was -0.52. The lowest was -4.62. And the median was -2.48.
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 * 1.6283||+||0.528 * 0.9354||+||0.404 * 0.9313||+||0.892 * 0.9932||+||0.115 * 1.1726|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9297||+||4.679 * 0.0236||-||0.327 * 0.9861|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $74.1 Mil.|
Revenue was 93.194 + 95.332 + 86.221 + 85.09 = $359.8 Mil.
Gross Profit was 38.626 + 35.906 + 38.235 + 34.799 = $147.6 Mil.
Total Current Assets was $170.8 Mil.
Total Assets was $334.1 Mil.
Property, Plant and Equipment(Net PPE) was $33.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.1 Mil.
Selling, General & Admin. Expense(SGA) was $76.8 Mil.
Total Current Liabilities was $96.5 Mil.
Long-Term Debt was $119.9 Mil.
Net Income was -0.348 + -1.964 + 1.058 + -0.477 = $-1.7 Mil.
Non Operating Income was -1.004 + -0.891 + -0.212 + -0.031 = $-2.1 Mil.
Cash Flow from Operations was -5.892 + -4.777 + -4.545 + 7.729 = $-7.5 Mil.
|Accounts Receivable was $45.8 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.
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)|
|=||(74.051 / 359.837)||/||(45.789 / 362.291)|
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)|
|=||(35.906 / 362.291)||/||(38.626 / 359.837)|
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 - (170.753 + 33.418) / 334.081)||/||(1 - (148.882 + 38.355) / 321.455)|
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))|
|=||(26.889 / (26.889 + 38.355))||/||(18.11 / (18.11 + 33.418))|
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)|
|=||(76.814 / 359.837)||/||(83.184 / 362.291)|
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)|
|=||((119.85 + 96.489) / 334.081)||/||((117.384 + 93.704) / 321.455)|
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|
|=||(-1.731 - -2.138||-||-7.485)||/||334.081|
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 -1.82 signals that the company is likely to 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