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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 10 years, the highest Beneish M-Score of ZBB Energy Corp was 150.79. The lowest was -7.30. And the median was -2.50.
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 ZBB Energy Corp 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 * 0.7202||+||0.528 * 0.4169||+||0.404 * 0.459||+||0.892 * 1.2904||+||0.115 * 1.947|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1944||+||4.679 * -0.0893||-||0.327 * 0.3159|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $0.26 Mil.|
Revenue was 0.301 + 0.565 + 1.249 + 4.572 = $6.69 Mil.
Gross Profit was 0.069 + 0.229 + -0.045 + 3.96 = $4.21 Mil.
Total Current Assets was $19.97 Mil.
Total Assets was $27.74 Mil.
Property, Plant and Equipment(Net PPE) was $4.37 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.67 Mil.
Selling, General & Admin. Expense(SGA) was $8.47 Mil.
Total Current Liabilities was $3.57 Mil.
Long-Term Debt was $1.87 Mil.
Net Income was -3.376 + -2.64 + -4.109 + 0.009 = $-10.12 Mil.
Non Operating Income was -0.225 + 1.175 + -0.354 + -0.055 = $0.54 Mil.
Cash Flow from Operations was -2.998 + -2.728 + -2.892 + 0.438 = $-8.18 Mil.
|Accounts Receivable was $0.28 Mil.
Revenue was 0.961 + 1.069 + 1.033 + 2.119 = $5.18 Mil.
Gross Profit was 0.363 + 0.472 + 0.231 + 0.295 = $1.36 Mil.
Total Current Assets was $3.29 Mil.
Total Assets was $10.87 Mil.
Property, Plant and Equipment(Net PPE) was $4.69 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.64 Mil.
Selling, General & Admin. Expense(SGA) was $5.50 Mil.
Total Current Liabilities was $4.52 Mil.
Long-Term Debt was $2.22 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)|
|=||(0.263 / 6.687)||/||(0.283 / 5.182)|
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)|
|=||(0.229 / 5.182)||/||(0.069 / 6.687)|
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 - (19.973 + 4.372) / 27.744)||/||(1 - (3.285 + 4.685) / 10.872)|
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))|
|=||(1.638 / (1.638 + 4.685))||/||(0.671 / (0.671 + 4.372))|
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)|
|=||(8.471 / 6.687)||/||(5.496 / 5.182)|
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)|
|=||((1.866 + 3.57) / 27.744)||/||((2.222 + 4.522) / 10.872)|
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|
|=||(-10.116 - 0.541||-||-8.18)||/||27.744|
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.
ZBB Energy Corp has a M-score of -3.12 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
ZBB Energy Corp Annual Data
ZBB Energy Corp Quarterly Data