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GuruFocus has detected 3 Warning Signs with RCM Technologies Inc $RCMT.
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RCM Technologies Inc (NAS:RCMT)
Beneish M-Score
-3.41 (As of Today)

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.

RCM Technologies Inc has a M-score of -3.41 suggests that the company is not a manipulator.

RCMT' s Beneish M-Score Range Over the Past 10 Years
Min: -6.59   Max: 7.01
Current: -3.41

-6.59
7.01

During the past 13 years, the highest Beneish M-Score of RCM Technologies Inc was 7.01. The lowest was -6.59. And the median was -2.46.


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 RCM Technologies 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 * 0.7587+0.528 * 1.0556+0.404 * 1.1941+0.892 * 0.9495+0.115 * 0.8331
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0233+4.679 * -0.165-0.327 * 0.9252
=-3.41

* 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 $40.0 Mil.
Revenue was 46.341 + 44.198 + 39.695 + 45.379 = $175.6 Mil.
Gross Profit was 11.752 + 12.106 + 10.144 + 12.104 = $46.1 Mil.
Total Current Assets was $49.3 Mil.
Total Assets was $65.8 Mil.
Property, Plant and Equipment(Net PPE) was $3.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.6 Mil.
Selling, General & Admin. Expense(SGA) was $41.2 Mil.
Total Current Liabilities was $20.6 Mil.
Long-Term Debt was $12.7 Mil.
Net Income was 0.55 + -0.216 + 0.11 + 0.863 = $1.3 Mil.
Non Operating Income was 0.002 + -0.283 + -0.014 + 0.011 = $-0.3 Mil.
Cash Flow from Operations was 1.869 + -0.493 + 4.447 + 6.627 = $12.5 Mil.
Accounts Receivable was $55.6 Mil.
Revenue was 47.176 + 47.407 + 45.077 + 45.286 = $184.9 Mil.
Gross Profit was 12.676 + 13.69 + 12.802 + 12.09 = $51.3 Mil.
Total Current Assets was $59.2 Mil.
Total Assets was $76.2 Mil.
Property, Plant and Equipment(Net PPE) was $4.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.5 Mil.
Selling, General & Admin. Expense(SGA) was $42.4 Mil.
Total Current Liabilities was $21.8 Mil.
Long-Term Debt was $19.9 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)
=(40.038 / 175.613) / (55.578 / 184.946)
=0.22798996 / 0.30050934
=0.7587

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)
=(51.258 / 184.946) / (46.106 / 175.613)
=0.27715117 / 0.26254321
=1.0556

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 - (49.346 + 3.763) / 65.8) / (1 - (59.202 + 4.725) / 76.242)
=0.19287234 / 0.16152514
=1.1941

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
=175.613 / 184.946
=0.9495

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))
=(1.541 / (1.541 + 4.725)) / (1.576 / (1.576 + 3.763))
=0.24593042 / 0.29518636
=0.8331

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)
=(41.198 / 175.613) / (42.4 / 184.946)
=0.23459539 / 0.22925611
=1.0233

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)
=((12.725 + 20.587) / 65.8) / ((19.9 + 21.819) / 76.242)
=0.5062614 / 0.54719184
=0.9252

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
=(1.307 - -0.284 - 12.45) / 65.8
=-0.165

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.

RCM Technologies Inc has a M-score of -3.41 suggests that the company will not 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.

RCM Technologies Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.09781.25550.92931.02710.73821.29291.24891.00660.96880.8428
GMI 1.01570.95891.01350.89271.00641.041.04850.97370.9551.0481
AQI 1.00540.361.04940.87950.90131.20610.91420.98011.141.2224
SGI 0.86040.9770.85340.90720.88761.01391.17121.13460.95850.95
DEPI 1.00160.94851.01950.89260.94790.75581.26371.22161.12350.8525
SGAI 0.93791.15081.03940.9561.02451.0041.04770.86571.1111.0224
LVGI 0.96761.85040.59430.89521.04611.78770.96451.74861.17130.9299
TATA -0.0247-0.443-0.2495-0.0912-0.0249-0.00560.06580.0285-0.0771-0.1375
M-score -2.60-4.93-3.69-3.04-3.00-2.41-1.77-2.44-2.93-3.20

RCM Technologies Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.006611.16691.23170.83920.96881.12390.6911.12850.84280.7587
GMI 0.97370.94590.93770.96020.9550.98510.99081.01461.04811.0556
AQI 0.98011.02361.08881.22041.141.22621.32961.19621.22241.1941
SGI 1.13461.08451.020.9860.95850.95740.97930.95750.950.9495
DEPI 1.22161.20760.99981.12531.12351.04241.0130.8470.85250.8331
SGAI 0.86570.89670.96550.97791.1111.08931.03291.01671.02241.0233
LVGI 1.74861.68741.53131.59661.17131.12381.06181.06940.92990.9252
TATA 0.02850.05550.0902-0.0708-0.0771-0.1659-0.2356-0.1828-0.1375-0.165
M-score -2.447.01-1.99-3.08-2.93-3.15-3.78-3.21-3.20-3.41
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