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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 -0.01. The lowest was -4.62. And the median was -2.57.
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 * 1.4643||+||0.528 * 1.0414||+||0.404 * 0.9049||+||0.892 * 1.0546||+||0.115 * 1.1188|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9776||+||4.679 * 0.0099||-||0.327 * 0.9859|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $72.5 Mil.|
Revenue was 101.14 + 87.927 + 81.867 + 93.194 = $364.1 Mil.
Gross Profit was 36.306 + 33.823 + 33.765 + 38.626 = $142.5 Mil.
Total Current Assets was $187.8 Mil.
Total Assets was $348.8 Mil.
Property, Plant and Equipment(Net PPE) was $33.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.4 Mil.
Selling, General & Admin. Expense(SGA) was $76.3 Mil.
Total Current Liabilities was $85.7 Mil.
Long-Term Debt was $135.1 Mil.
Net Income was 3.024 + 0.717 + 0.295 + -0.348 = $3.7 Mil.
Non Operating Income was -0.168 + 0.092 + 0.289 + -1.004 = $-0.8 Mil.
Cash Flow from Operations was 2.851 + -4.368 + 8.452 + -5.892 = $1.0 Mil.
|Accounts Receivable was $46.9 Mil.
Revenue was 95.332 + 86.221 + 85.09 + 78.622 = $345.3 Mil.
Gross Profit was 35.906 + 38.235 + 34.799 + 31.797 = $140.7 Mil.
Total Current Assets was $160.7 Mil.
Total Assets was $325.8 Mil.
Property, Plant and Equipment(Net PPE) was $33.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $20.8 Mil.
Selling, General & Admin. Expense(SGA) was $74.0 Mil.
Total Current Liabilities was $92.7 Mil.
Long-Term Debt was $116.5 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)|
|=||(72.45 / 364.128)||/||(46.916 / 345.265)|
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)|
|=||(140.737 / 345.265)||/||(142.52 / 364.128)|
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 - (187.775 + 33.685) / 348.826)||/||(1 - (160.729 + 33.636) / 325.833)|
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))|
|=||(20.765 / (20.765 + 33.636))||/||(17.443 / (17.443 + 33.685))|
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)|
|=||(76.286 / 364.128)||/||(73.993 / 345.265)|
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)|
|=||((135.098 + 85.744) / 348.826)||/||((116.523 + 92.707) / 325.833)|
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|
|=||(3.688 - -0.791||-||1.043)||/||348.826|
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 -1.95 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