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Beneish M-Score -0.89 higher than -2.22, which implies that it might have manipulated its financial results.
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 -2.33.
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 * 1.1398||+||0.528 * 3.3599||+||0.404 * 1.0818||+||0.892 * 0.3536||+||0.115 * 1.1746|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 3.2125||+||4.679 * 0.2325||-||0.327 * 0.9007|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $0.24 Mil.|
Revenue was 0.585 + 0.301 + 0.565 + 1.249 = $2.70 Mil.
Gross Profit was 0.276 + 0.069 + 0.229 + -0.045 = $0.53 Mil.
Total Current Assets was $17.18 Mil.
Total Assets was $24.69 Mil.
Property, Plant and Equipment(Net PPE) was $4.32 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.10 Mil.
Selling, General & Admin. Expense(SGA) was $7.64 Mil.
Total Current Liabilities was $3.88 Mil.
Long-Term Debt was $1.78 Mil.
Net Income was -3.456 + -3.376 + -2.64 + -4.109 = $-13.58 Mil.
Non Operating Income was -0.207 + -0.225 + 1.175 + -0.354 = $0.39 Mil.
Cash Flow from Operations was -11.091 + -2.998 + -2.728 + -2.892 = $-19.71 Mil.
|Accounts Receivable was $0.58 Mil.
Revenue was 4.572 + 0.961 + 1.069 + 1.033 = $7.64 Mil.
Gross Profit was 3.96 + 0.363 + 0.472 + 0.231 = $5.03 Mil.
Total Current Assets was $16.15 Mil.
Total Assets was $23.48 Mil.
Property, Plant and Equipment(Net PPE) was $4.53 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.42 Mil.
Selling, General & Admin. Expense(SGA) was $6.73 Mil.
Total Current Liabilities was $3.84 Mil.
Long-Term Debt was $2.13 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)|
|=||(0.235 / 2.7)||/||(0.583 / 7.635)|
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)|
|=||(0.069 / 7.635)||/||(0.276 / 2.7)|
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 - (17.181 + 4.316) / 24.685)||/||(1 - (16.15 + 4.527) / 23.48)|
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))|
|=||(1.421 / (1.421 + 4.527))||/||(1.102 / (1.102 + 4.316))|
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)|
|=||(7.64 / 2.7)||/||(6.725 / 7.635)|
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)|
|=||((1.776 + 3.881) / 24.685)||/||((2.134 + 3.84) / 23.48)|
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|
|=||(-13.581 - 0.389||-||-19.709)||/||24.685|
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 -0.89 signals that the company is likely to 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