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GuruFocus has detected 1 Warning Sign with Richardson Electronics Ltd $RELL.
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Richardson Electronics Ltd (NAS:RELL)
Beneish M-Score
-2.74 (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.

Richardson Electronics Ltd has a M-score of -2.74 suggests that the company is not a manipulator.

RELL' s Beneish M-Score Range Over the Past 10 Years
Min: -3.86   Max: 3.98
Current: -2.74

-3.86
3.98

During the past 13 years, the highest Beneish M-Score of Richardson Electronics Ltd was 3.98. The lowest was -3.86. And the median was -2.43.


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 Richardson Electronics Ltd 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 * 1.0049+0.528 * 0.9314+0.404 * 0.7554+0.892 * 1.0123+0.115 * 1.1746
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9993+4.679 * -0.0276-0.327 * 1.0839
=-2.74

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

This Year (Feb17) TTM:Last Year (Feb16) TTM:
Accounts Receivable was $21.2 Mil.
Revenue was 32.313 + 33.827 + 33.373 + 39.568 = $139.1 Mil.
Gross Profit was 10.692 + 10.964 + 10.24 + 13.388 = $45.3 Mil.
Total Current Assets was $124.6 Mil.
Total Assets was $153.3 Mil.
Property, Plant and Equipment(Net PPE) was $15.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.5 Mil.
Selling, General & Admin. Expense(SGA) was $51.4 Mil.
Total Current Liabilities was $21.1 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -1.431 + -2.522 + -2.85 + -0.155 = $-7.0 Mil.
Non Operating Income was -0.198 + 0.164 + -0.277 + -0.174 = $-0.5 Mil.
Cash Flow from Operations was -1.265 + -0.265 + -1.675 + 0.97 = $-2.2 Mil.
Accounts Receivable was $20.9 Mil.
Revenue was 31.291 + 34.086 + 37.071 + 34.946 = $137.4 Mil.
Gross Profit was 9.75 + 10.435 + 11.262 + 10.218 = $41.7 Mil.
Total Current Assets was $133.2 Mil.
Total Assets was $164.0 Mil.
Property, Plant and Equipment(Net PPE) was $11.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.3 Mil.
Selling, General & Admin. Expense(SGA) was $50.8 Mil.
Total Current Liabilities was $20.8 Mil.
Long-Term Debt was $0.0 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)
=(21.24 / 139.081) / (20.881 / 137.394)
=0.15271676 / 0.15197898
=1.0049

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)
=(41.665 / 137.394) / (45.284 / 139.081)
=0.30325196 / 0.32559444
=0.9314

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 - (124.554 + 15.208) / 153.322) / (1 - (133.169 + 11.624) / 163.992)
=0.08844132 / 0.11707278
=0.7554

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
=139.081 / 137.394
=1.0123

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))
=(2.345 / (2.345 + 11.624)) / (2.536 / (2.536 + 15.208))
=0.16787172 / 0.14292155
=1.1746

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)
=(51.391 / 139.081) / (50.801 / 137.394)
=0.3695041 / 0.36974686
=0.9993

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)
=((0 + 21.064) / 153.322) / ((0 + 20.785) / 163.992)
=0.13738407 / 0.12674399
=1.0839

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
=(-6.958 - -0.485 - -2.235) / 153.322
=-0.0276

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.

Richardson Electronics Ltd has a M-score of -2.74 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.

Richardson Electronics Ltd Annual Data

May07May08May09May10May11May12May13May14May15May16
DSRI 1.00731.01580.96660.78380.96470.88751.03611.02731.1391.1584
GMI 1.02220.99591.08010.72421.05070.97931.00640.99060.98970.9514
AQI 0.6330.55420.60890.70515.64940.90410.71880.46943.70131.5396
SGI 1.05331.020.87330.27271.17360.99350.89380.9780.99271.0369
DEPI 0.99321.11550.81610.47211.47181.34971.17531.31090.90840.9346
SGAI 1.01210.95871.00911.43360.85350.94481.14461.07081.14011.0115
LVGI 0.90050.78821.04370.86490.57330.37381.20150.95671.32211.0204
TATA 0.1433-0.125-0.1015-0.030.27520.2473-0.0308-0.03740.02230.0419
M-score -1.86-3.13-3.25-3.821.05-1.23-2.87-2.83-1.31-1.93

Richardson Electronics Ltd Quarterly Data

Nov14Feb15May15Aug15Nov15Feb16May16Aug16Nov16Feb17
DSRI 0.88270.9571.1391.28851.17011.09251.15840.90470.9841.0049
GMI 0.99790.99770.98971.00041.00110.98610.95140.94580.93050.9314
AQI 2.55882.71043.70132.24081.53491.53321.53960.67970.76960.7554
SGI 0.98770.99730.99271.00671.020211.03690.99270.98911.0123
DEPI 1.02690.98360.90840.94030.85140.85140.93460.94121.20791.1746
SGAI 1.13521.13961.14011.12041.06691.04141.01151.03491.03020.9993
LVGI 1.15931.16681.32211.29231.20791.19251.02040.95681.03311.0839
TATA -0.0403-0.02270.02230.05260.04710.04710.04190.0051-0.0081-0.0276
M-score -2.23-2.02-1.31-1.58-1.97-2.05-1.93-2.71-2.66-2.74
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