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TeleCommunication Systems Inc (NAS:TSYS)
Beneish M-Score
-4.24 (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 -4.24 suggests that the company is not a manipulator.

TSYS' s 10-Year Beneish M-Score Range
Min: -6.38   Max: 0.24
Current: -4.24

-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 -2.74.


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 * 1.0083+0.528 * 0.853+0.404 * 0.9734+0.892 * 0.7313+0.115 * 0.8356
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.2605+4.679 * -0.2849-0.327 * 1.1214
=-4.24

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $61.5 Mil.
Revenue was 85.09 + 78.622 + 96.033 + 92.842 = $352.6 Mil.
Gross Profit was 34.799 + 31.797 + 35.783 + 35.907 = $138.3 Mil.
Total Current Assets was $151.1 Mil.
Total Assets was $320.9 Mil.
Property, Plant and Equipment(Net PPE) was $36.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $25.1 Mil.
Selling, General & Admin. Expense(SGA) was $80.1 Mil.
Total Current Liabilities was $94.2 Mil.
Long-Term Debt was $115.6 Mil.
Net Income was -0.477 + -55.742 + -0.155 + -1.871 = $-58.2 Mil.
Non Operating Income was -0.031 + -0.332 + -1.643 + -1.453 = $-3.5 Mil.
Cash Flow from Operations was 7.729 + 9.567 + 7.206 + 12.13 = $36.6 Mil.
Accounts Receivable was $83.4 Mil.
Revenue was 94.794 + 132.671 + 140.056 + 114.622 = $482.1 Mil.
Gross Profit was 35.481 + 47.165 + 44.126 + 34.526 = $161.3 Mil.
Total Current Assets was $176.8 Mil.
Total Assets was $393.2 Mil.
Property, Plant and Equipment(Net PPE) was $48.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $25.1 Mil.
Selling, General & Admin. Expense(SGA) was $86.9 Mil.
Total Current Liabilities was $93.4 Mil.
Long-Term Debt was $135.9 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)
=(61.519 / 352.587) / (83.431 / 482.143)
=0.17447892 / 0.17304202
=1.0083

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)
=(31.797 / 482.143) / (34.799 / 352.587)
=0.3345439 / 0.39220391
=0.853

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 - (151.056 + 36.334) / 320.895) / (1 - (176.848 + 48.307) / 393.215)
=0.41603951 / 0.42739977
=0.9734

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
=352.587 / 482.143
=0.7313

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))
=(25.072 / (25.072 + 48.307)) / (25.135 / (25.135 + 36.334))
=0.34167814 / 0.4089053
=0.8356

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)
=(80.065 / 352.587) / (86.855 / 482.143)
=0.22707871 / 0.18014365
=1.2605

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)
=((115.593 + 94.238) / 320.895) / ((135.909 + 93.368) / 393.215)
=0.65389302 / 0.58308305
=1.1214

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
=(-58.245 - -3.459 - 36.632) / 320.895
=-0.2849

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 -4.24 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

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 1.03880.91960.86870.83980.96510.84080.9090.95340.78351.0083
GMI 0.99811.06031.13631.12871.08151.02390.91690.86230.85690.853
AQI 0.99830.92660.67780.79510.81340.83441.40040.98231.01290.9734
SGI 1.09421.12061.13311.17371.14571.10821.02530.87380.74330.7313
DEPI 1.0841.1121.00040.99410.99780.97420.45751.04460.8440.8356
SGAI 1.13191.07271.04921.02220.98161.01041.08881.18131.31611.2605
LVGI 0.91110.93111.27491.36111.30771.31951.00380.92151.08571.1214
TATA -0.048-0.0654-0.4081-0.3624-0.3277-0.3752-0.052-0.0726-0.3203-0.2849
M-score -2.57-2.73-4.55-4.31-4.05-4.45-2.75-3.06-4.58-4.24
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