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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 -6.38. And the median was -2.77.
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 * 0.9832||+||0.528 * 0.9094||+||0.404 * 0.9692||+||0.892 * 0.8293||+||0.115 * 0.8913|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0302||+||4.679 * -0.1953||-||0.327 * 1.1043|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|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.
Net Income was -1.964 + 1.058 + -0.477 + -55.742 = $-57.1 Mil.
Non Operating Income was -0.891 + -0.212 + -0.031 + -0.332 = $-1.5 Mil.
Cash Flow from Operations was -4.777 + -4.545 + 7.729 + 9.567 = $8.0 Mil.
|Accounts Receivable was $57.5 Mil.
Revenue was 96.033 + 92.842 + 94.794 + 132.671 = $416.3 Mil.
Gross Profit was 35.783 + 35.907 + 35.481 + 47.165 = $154.3 Mil.
Total Current Assets was $178.7 Mil.
Total Assets was $393.2 Mil.
Property, Plant and Equipment(Net PPE) was $50.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $26.2 Mil.
Selling, General & Admin. Expense(SGA) was $86.6 Mil.
Total Current Liabilities was $88.9 Mil.
Long-Term Debt was $139.7 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)|
|=||(46.916 / 345.265)||/||(57.541 / 416.34)|
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)|
|=||(38.235 / 416.34)||/||(35.906 / 345.265)|
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 - (160.729 + 33.636) / 325.833)||/||(1 - (178.696 + 50.795) / 393.167)|
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))|
|=||(26.194 / (26.194 + 50.795))||/||(20.765 / (20.765 + 33.636))|
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)|
|=||(73.993 / 345.265)||/||(86.607 / 416.34)|
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)|
|=||((116.523 + 92.707) / 325.833)||/||((139.728 + 88.902) / 393.167)|
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|
|=||(-57.125 - -1.466||-||7.974)||/||325.833|
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 -3.67 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