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TeleCommunication Systems Inc (NAS:TSYS)
Beneish M-Score
-3.68 (As of Today)

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 -3.68 suggests that the company is not a manipulator.

TSYS' s 10-Year Beneish M-Score Range
Min: -6.38   Max: 0.24
Current: -3.68

-6.38
0.24

During the past 13 years, the highest Beneish M-Score of TeleCommunication Systems Inc was 0.24. The lowest was -6.38. And the median was -2.75.


Definition

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 * 1.1703+0.528 * 0.8694+0.404 * 0.7874+0.892 * 0.7515+0.115 * 1.975
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1468+4.679 * -0.2243-0.327 * 1.0657
=-3.68

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $66.4 Mil.
Revenue was 86.221 + 85.09 + 78.622 + 96.033 = $346.0 Mil.
Gross Profit was 38.235 + 34.799 + 31.797 + 35.783 = $140.6 Mil.
Total Current Assets was $158.0 Mil.
Total Assets was $325.7 Mil.
Property, Plant and Equipment(Net PPE) was $35.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $23.2 Mil.
Selling, General & Admin. Expense(SGA) was $76.8 Mil.
Total Current Liabilities was $94.6 Mil.
Long-Term Debt was $114.1 Mil.
Net Income was 1.058 + -0.477 + -55.742 + -0.155 = $-55.3 Mil.
Non Operating Income was -0.212 + -0.031 + -0.332 + -1.643 = $-2.2 Mil.
Cash Flow from Operations was -4.545 + 7.729 + 9.567 + 7.206 = $20.0 Mil.
Accounts Receivable was $75.5 Mil.
Revenue was 92.842 + 94.794 + 132.671 + 140.056 = $460.4 Mil.
Gross Profit was 35.907 + 35.481 + 47.165 + 44.126 = $162.7 Mil.
Total Current Assets was $190.5 Mil.
Total Assets was $409.1 Mil.
Property, Plant and Equipment(Net PPE) was $7.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $26.1 Mil.
Selling, General & Admin. Expense(SGA) was $89.1 Mil.
Total Current Liabilities was $91.1 Mil.
Long-Term Debt was $154.9 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(66.42 / 345.966) / (75.523 / 460.363)
=0.19198418 / 0.16405098
=1.1703

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(34.799 / 460.363) / (38.235 / 345.966)
=0.35337114 / 0.40643878
=0.8694

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (158.018 + 35.096) / 325.686) / (1 - (190.473 + 7.117) / 409.053)
=0.40705465 / 0.51695746
=0.7874

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=345.966 / 460.363
=0.7515

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))
=(26.126 / (26.126 + 7.117)) / (23.197 / (23.197 + 35.096))
=0.78590982 / 0.397938
=1.975

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)
=(76.767 / 345.966) / (89.071 / 460.363)
=0.22189175 / 0.19347993
=1.1468

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)
=((114.125 + 94.557) / 325.686) / ((154.88 + 91.071) / 409.053)
=0.64074599 / 0.60126927
=1.0657

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(-55.316 - -2.218 - 19.957) / 325.686
=-0.2243

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 -3.68 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

TeleCommunication Systems Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.92090.91730.87561.05881.5360.96850.59031.03880.96510.7835
GMI 0.74991.04251.01421.16271.01670.97291.06920.99811.08150.8569
AQI 4.61450.37311.20430.88911.6523.16690.95170.99830.81341.0129
SGI 1.05261.05411.2231.15391.5271.36321.29561.09421.14570.7433
DEPI 1.60920.95610.9861.06940.91451.21720.86331.0840.99780.844
SGAI 1.05081.01240.91650.94450.87920.8980.91761.13190.98161.3161
LVGI 0.96161.09441.26670.80040.80061.510.90390.91111.30771.0857
TATA -0.1319-0.1779-0.3193-0.08850.1731-0.0549-0.126-0.048-0.3277-0.3203
M-score -1.72-3.61-3.87-2.58-0.36-1.71-3.14-2.57-4.05-4.58

TeleCommunication Systems Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.91960.86870.83980.96510.84080.9090.95340.78351.00831.1703
GMI 1.06031.13631.12871.08151.02390.91690.86230.85690.8530.8694
AQI 0.92660.67780.79510.81340.83441.40040.98231.01290.97340.7874
SGI 1.12061.13311.17371.14571.10821.02530.87380.74330.73130.7515
DEPI 1.11651.00040.99410.99780.97420.45751.04460.8440.83561.975
SGAI 1.07271.04921.02220.98161.01041.08881.18131.31611.26051.1468
LVGI 0.93111.27491.36111.30771.31951.00380.92151.08571.12141.0657
TATA -0.0654-0.4081-0.3624-0.3277-0.3752-0.052-0.0726-0.3203-0.2849-0.2243
M-score -2.73-4.55-4.31-4.05-4.45-2.75-3.06-4.58-4.24-3.68
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