Market Cap : 247.91 M | Enterprise Value : 360.1 M | P/E (TTM) : | P/B : 0.93 |
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The zones of discrimination for M-Score is as such:
An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator.
An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.
Good Sign:
Beneish M-Score -2.68 no higher than -1.78, which implies that the company is unlikely to be a manipulator.
During the past 10 years, the highest Beneish M-Score of Applied Optoelectronics was -1.47. The lowest was -3.43. And the median was -2.41.
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
* The bar in red indicates where Applied Optoelectronics's Beneish M-Score falls into.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski 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 Applied Optoelectronics 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 * 1.5015 | + | 0.528 * 1.0349 | + | 0.404 * 0.2488 | + | 0.892 * 1.1534 | + | 0.115 * 1.072 | |
- | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI | |||||||
- | 0.172 * 0.9523 | + | 4.679 * -0.0954 | - | 0.327 * 1.2452 | |||||||
= | -2.68 |
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
This Year (Sep20) TTM: | Last Year (Sep19) TTM: |
Accounts Receivable was $51.5 Mil. Revenue was 76.608 + 65.222 + 40.467 + 48.658 = $231.0 Mil. Gross Profit was 19.19 + 13.736 + 6.338 + 11.336 = $50.6 Mil. Total Current Assets was $229.9 Mil. Total Assets was $497.8 Mil. Property, Plant and Equipment(Net PPE) was $257.6 Mil. Depreciation, Depletion and Amortization(DDA) was $24.4 Mil. Selling, General, & Admin. Expense(SGA) was $55.2 Mil. Total Current Liabilities was $132.3 Mil. Long-Term Debt & Capital Lease Obligation was $100.3 Mil. Net Income was -9.616 + -18.6 + -16.797 + -35.429 = $-80.4 Mil. Non Operating Income was 0.019 + 0.098 + 0.151 + -0.156 = $0.1 Mil. Cash Flow from Operations was -6.136 + -15.523 + -8.246 + -3.165 = $-33.1 Mil. |
Accounts Receivable was $29.7 Mil. Revenue was 46.084 + 43.411 + 52.719 + 58.018 = $200.2 Mil. Gross Profit was 11.976 + 10.538 + 12.351 + 10.537 = $45.4 Mil. Total Current Assets was $190.6 Mil. Total Assets was $483.9 Mil. Property, Plant and Equipment(Net PPE) was $253.3 Mil. Depreciation, Depletion and Amortization(DDA) was $25.9 Mil. Selling, General, & Admin. Expense(SGA) was $50.2 Mil. Total Current Liabilities was $64.4 Mil. Long-Term Debt & Capital Lease Obligation was $117.2 Mil. |
1. DSRI = Days Sales in Receivables Index
Measured as the ratio of Revenue in Accounts Receivable 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) |
= | (51.453 / 230.955) | / | (29.709 / 200.232) | |
= | 0.22278366 | / | 0.14837289 | |
= | 1.5015 |
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) | |
= | (45.402 / 200.232) | / | (50.6 / 230.955) | |
= | 0.22674697 | / | 0.2190903 | |
= | 1.0349 |
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 Property, Plant and Equipment to Total Assets.
AQI | = | (1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) | / | (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1) |
= | (1 - (229.93 + 257.628) / 497.787) | / | (1 - (190.647 + 253.273) / 483.878) | |
= | 0.02054895 | / | 0.08257867 | |
= | 0.2488 |
4. SGI = Sales Growth Index
Ratio of Revenue 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 | |
= | 230.955 | / | 200.232 | |
= | 1.1534 |
5. DEPI = Depreciation Index
Measured as the ratio of the rate of Depreciation, Depletion and Amortization 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)) |
= | (25.873 / (25.873 + 253.273)) | / | (24.382 / (24.382 + 257.628)) | |
= | 0.09268626 | / | 0.08645793 | |
= | 1.072 |
Note: If the Depreciation, Depletion and Amortization data is not available, we assume that the depreciation rate is constant and set the Depreciation Index to 1.
6. SGAI = Sales, General and Administrative expenses Index
The ratio of Selling, General, & Admin. Expense(SGA) to Sales 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) |
= | (55.171 / 230.955) | / | (50.228 / 200.232) | |
= | 0.23888203 | / | 0.25084902 | |
= | 0.9523 |
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 in leverage
LVGI | = | ((LTD_t + CurrentLiabilities_t) / TotalAssets_t) | / | ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1) |
= | ((100.303 + 132.318) / 497.787) | / | ((117.17 + 64.423) / 483.878) | |
= | 0.46731032 | / | 0.37528675 | |
= | 1.2452 |
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 | |
= | (-80.442 - 0.112 | - | -33.07) | / | 497.787 | |
= | -0.0954 |
An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator. An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.
Applied Optoelectronics has a M-score of -2.68 suggests that the company is unlikely to be a manipulator.
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