Market Cap : 92.46 M | Enterprise Value : 92.53 M | PE Ratio : 193.69 | PB Ratio : |
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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.
Warning Sign:
Beneish M-Score 3.61 higher than -1.78, which implies that the company might have manipulated its financial results.
During the past 9 years, the highest Beneish M-Score of Starco Brands was 422.30. The lowest was -348.88. And the median was -11.33.
* 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 Starco Brands'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 Starco Brands 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 * 4.1868 | + | 0.528 * 1 | + | 0.404 * 0.2415 | + | 0.892 * 4.0903 | + | 0.115 * 1 | |
- | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI | |||||||
- | 0.172 * 0.3353 | + | 4.679 * 0.0704 | - | 0.327 * 0.1992 | |||||||
= | 3.61 |
* 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 $0.27 Mil. Revenue was 0.768 + 0.297 + 0.056 + 0.012 = $1.13 Mil. Gross Profit was 0.768 + 0.297 + 0.056 + 0.012 = $1.13 Mil. Total Current Assets was $0.91 Mil. Total Assets was $0.97 Mil. Property, Plant and Equipment(Net PPE) was $0.06 Mil. Depreciation, Depletion and Amortization(DDA) was $0.00 Mil. Selling, General, & Admin. Expense(SGA) was $0.59 Mil. Total Current Liabilities was $1.18 Mil. Long-Term Debt & Capital Lease Obligation was $0.01 Mil. Net Income was 0.462 + 0.156 + -0.034 + -0.047 = $0.54 Mil. Non Operating Income was 0.007 + 0.007 + 0.005 + 0.005 = $0.02 Mil. Cash Flow from Operations was 0.499 + -0.031 + -0.041 + 0.018 = $0.45 Mil. |
Accounts Receivable was $0.02 Mil. Revenue was 0.05 + 0.117 + 0.061 + 0.049 = $0.28 Mil. Gross Profit was 0.05 + 0.117 + 0.061 + 0.049 = $0.28 Mil. Total Current Assets was $0.08 Mil. Total Assets was $0.18 Mil. Property, Plant and Equipment(Net PPE) was $0.10 Mil. Depreciation, Depletion and Amortization(DDA) was $0.00 Mil. Selling, General, & Admin. Expense(SGA) was $0.43 Mil. Total Current Liabilities was $1.03 Mil. Long-Term Debt & Capital Lease Obligation was $0.06 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) |
= | (0.274 / 1.133) | / | (0.016 / 0.277) | |
= | 0.24183583 | / | 0.05776173 | |
= | 4.1868 |
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) | |
= | (0.277 / 0.277) | / | (1.133 / 1.133) | |
= | 1 | / | 1 | |
= | 1 |
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 - (0.907 + 0.055) / 0.966) | / | (1 - (0.077 + 0.095) / 0.175) | |
= | 0.00414079 | / | 0.01714286 | |
= | 0.2415 |
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 | |
= | 1.133 | / | 0.277 | |
= | 4.0903 |
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)) |
= | (0 / (0 + 0.095)) | / | (0 / (0 + 0.055)) | |
= | 0 | / | 0 | |
= | 1 |
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) |
= | (0.587 / 1.133) | / | (0.428 / 0.277) | |
= | 0.51809356 | / | 1.54512635 | |
= | 0.3353 |
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) |
= | ((0.012 + 1.18) / 0.966) | / | ((0.056 + 1.028) / 0.175) | |
= | 1.23395445 | / | 6.19428571 | |
= | 0.1992 |
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 | |
= | (0.537 - 0.024 | - | 0.445) | / | 0.966 | |
= | 0.0704 |
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.
Starco Brands has a M-score of 3.61 signals that the company is likely to be a manipulator.
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