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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.
ZBB Energy Corporation has a M-score of -5.07 suggests that the company is not a manipulator.
During the past 9 years, the highest Beneish M-Score of ZBB Energy Corporation was 39.53. The lowest was -7.30. And the median was -2.27.
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 Corporation 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 * 0.3283||+||0.528 * 0.6277||+||0.404 * 1.0993||+||0.892 * 0.7102||+||0.115 * 0.9125|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1874||+||4.679 * -0.3003||-||0.327 * 1.3271|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $0.34 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.
Net Income was -2.159 + -2.597 + -3.088 + -2.824 = $-10.67 Mil.
Non Operating Income was -0.131 + -0.117 + -0.128 + -0.163 = $-0.54 Mil.
Cash Flow from Operations was -2.422 + -0.811 + -1.915 + -1.716 = $-6.86 Mil.
|Accounts Receivable was $1.44 Mil.
Revenue was 2.748 + 1.823 + 1.081 + 1.645 = $7.30 Mil.
Gross Profit was 0.483 + 0.286 + 0.058 + 0.376 = $1.20 Mil.
Total Current Assets was $7.61 Mil.
Total Assets was $17.00 Mil.
Property, Plant and Equipment(Net PPE) was $5.26 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.63 Mil.
Selling, General & Admin. Expense(SGA) was $6.52 Mil.
Total Current Liabilities was $5.23 Mil.
Long-Term Debt was $2.72 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)|
|=||(0.335 / 5.182)||/||(1.437 / 7.297)|
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)|
|=||(0.472 / 7.297)||/||(0.363 / 5.182)|
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 - (3.285 + 4.685) / 10.872)||/||(1 - (7.61 + 5.262) / 17)|
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))|
|=||(1.629 / (1.629 + 5.262))||/||(1.638 / (1.638 + 4.685))|
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)|
|=||(5.496 / 5.182)||/||(6.518 / 7.297)|
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)|
|=||((2.222 + 4.522) / 10.872)||/||((2.719 + 5.227) / 17)|
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|
|=||(-10.668 - -0.539||-||-6.864)||/||10.872|
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 Corporation has a M-score of -5.07 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 Corporation Annual Data
ZBB Energy Corporation Quarterly Data