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GuruFocus has detected 3 Warning Signs with InterDigital Inc $NAS:IDCC.
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InterDigital Inc (NAS:IDCC)
Beneish M-Score
-1.11 (As of Today)

Warning Sign:

Beneish M-Score -1.11 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.

InterDigital Inc has a M-score of -1.11 signals that the company is a manipulator.

NAS:IDCC' s Beneish M-Score Range Over the Past 10 Years
Min: -6.44   Max: 3.9
Current: -1.11

-6.44
3.9

During the past 13 years, the highest Beneish M-Score of InterDigital Inc was 3.90. The lowest was -6.44. And the median was -2.19.


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 InterDigital 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 * 2.3616+0.528 * 0.8945+0.404 * 0.7531+0.892 * 1.4872+0.115 * 0.9683
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7472+4.679 * -0.037-0.327 * 1.0866
=-1.11

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $402.5 Mil.
Revenue was 94.53 + 273.868 + 208.307 + 75.915 = $652.6 Mil.
Gross Profit was 65.123 + 241.925 + 182.158 + 47.63 = $536.8 Mil.
Total Current Assets was $1,342.2 Mil.
Total Assets was $1,865.4 Mil.
Property, Plant and Equipment(Net PPE) was $12.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $54.4 Mil.
Selling, General & Admin. Expense(SGA) was $46.9 Mil.
Total Current Liabilities was $414.7 Mil.
Long-Term Debt was $275.2 Mil.
Net Income was 33.756 + 136.47 + 104.466 + 39.994 = $314.7 Mil.
Non Operating Income was -0.217 + -0.229 + -0.385 + -0.706 = $-1.5 Mil.
Cash Flow from Operations was -25.855 + 233.282 + -10.171 + 188.029 = $385.3 Mil.
Accounts Receivable was $114.6 Mil.
Revenue was 107.764 + 112.098 + 100.408 + 118.551 = $438.8 Mil.
Gross Profit was 80.597 + 82.897 + 72.045 + 87.339 = $322.9 Mil.
Total Current Assets was $798.1 Mil.
Total Assets was $1,274.7 Mil.
Property, Plant and Equipment(Net PPE) was $12.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $49.0 Mil.
Selling, General & Admin. Expense(SGA) was $42.2 Mil.
Total Current Liabilities was $171.2 Mil.
Long-Term Debt was $262.6 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)
=(402.533 / 652.62) / (114.608 / 438.821)
=0.61679538 / 0.26117255
=2.3616

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)
=(322.878 / 438.821) / (536.836 / 652.62)
=0.73578521 / 0.82258588
=0.8945

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 - (1342.235 + 12.033) / 1865.388) / (1 - (798.096 + 12.802) / 1274.661)
=0.27400198 / 0.36383242
=0.7531

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
=652.62 / 438.821
=1.4872

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))
=(49.029 / (49.029 + 12.802)) / (54.405 / (54.405 + 12.033))
=0.79295176 / 0.81888377
=0.9683

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)
=(46.933 / 652.62) / (42.237 / 438.821)
=0.07191474 / 0.09625109
=0.7472

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)
=((275.222 + 414.665) / 1865.388) / ((262.635 + 171.225) / 1274.661)
=0.36983566 / 0.34037285
=1.0866

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
=(314.686 - -1.537 - 385.285) / 1865.388
=-0.037

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.

InterDigital Inc has a M-score of -1.11 signals that the company is likely to 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 local exchange's currency.

InterDigital Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 2.03610.26554.82580.11911.09172.75311.11370.43580.98142.8117
GMI 1.25620.98530.89010.95371.1160.94161.44460.82630.93260.8768
AQI 1.56481.36470.60161.32350.78251.00510.99651.48820.93030.9342
SGI 0.48750.97541.30171.32660.76482.19750.49071.2781.06161.5084
DEPI 0.98950.81520.84230.94670.97010.97170.99041.00880.9670.9882
SGAI 2.38431.07050.5690.8611.45470.53981.70750.94390.99260.7711
LVGI 1.37461.05610.88650.73161.79490.96320.85241.17281.26640.9024
TATA -0.2481-0.1469-0.25670.01960.13440.0894-0.1419-0.10250.0039-0.0718
M-score -3.14-3.78-0.02-2.70-2.340.68-3.33-3.17-2.58-0.72

InterDigital Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.43581.07040.36960.89410.98141.18680.94981.04292.81172.3616
GMI 0.82630.8121.05560.98410.93260.97680.92990.89260.87680.8945
AQI 1.48820.95551.09090.9590.93031.60811.47021.30550.93420.7531
SGI 1.2781.39460.84920.96761.06160.93691.00891.21331.50841.4872
DEPI 1.00880.98540.98351.00310.9671.01430.990.98550.98820.9683
SGAI 0.94390.87991.26571.12190.99261.15691.0970.89090.77110.7472
LVGI 1.17281.48841.38461.3711.26640.77980.97150.76780.90241.0866
TATA -0.1116-0.0733-0.09410.02020.0091-0.0044-0.1143-0.0534-0.0697-0.037
M-score -3.21-2.66-3.74-2.68-2.55-2.10-2.91-2.34-0.71-1.11
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