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GuruFocus has detected 3 Warning Signs with EchoStar Corp $SATS.
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EchoStar Corp (NAS:SATS)
Beneish M-Score
-3.63 (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.

EchoStar Corp has a M-score of -3.63 suggests that the company is not a manipulator.

SATS' s Beneish M-Score Range Over the Past 10 Years
Min: -3.87   Max: 0.15
Current: -3.63

-3.87
0.15

During the past 11 years, the highest Beneish M-Score of EchoStar Corp was 0.15. The lowest was -3.87. And the median was -2.88.


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 EchoStar Corp 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 * 0.3458+0.528 * 0.9827+0.404 * 0.7935+0.892 * 0.9627+0.115 * 1.0203
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0772+4.679 * -0.0704-0.327 * 1.2561
=-3.63

* 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 $168 Mil.
Revenue was 433.151 + 740.393 + 742.349 + 757.629 = $2,674 Mil.
Gross Profit was 257.43 + 333.782 + 327.742 + 327.266 = $1,246 Mil.
Total Current Assets was $3,751 Mil.
Total Assets was $8,747 Mil.
Property, Plant and Equipment(Net PPE) was $3,426 Mil.
Depreciation, Depletion and Amortization(DDA) was $495 Mil.
Selling, General & Admin. Expense(SGA) was $370 Mil.
Total Current Liabilities was $424 Mil.
Long-Term Debt was $3,620 Mil.
Net Income was 37.715 + 38.188 + 36.801 + 55.786 = $168 Mil.
Non Operating Income was 16.217 + -0.433 + 6.039 + 10.336 = $32 Mil.
Cash Flow from Operations was 141.355 + 228.634 + 219.075 + 162.785 = $752 Mil.
Accounts Receivable was $504 Mil.
Revenue was 431.974 + 790.587 + 760.879 + 793.595 = $2,777 Mil.
Gross Profit was 263.284 + 338.393 + 333.204 + 337.207 = $1,272 Mil.
Total Current Assets was $2,149 Mil.
Total Assets was $7,336 Mil.
Property, Plant and Equipment(Net PPE) was $3,527 Mil.
Depreciation, Depletion and Amortization(DDA) was $522 Mil.
Selling, General & Admin. Expense(SGA) was $357 Mil.
Total Current Liabilities was $2,409 Mil.
Long-Term Debt was $291 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)
=(167.86 / 2673.522) / (504.258 / 2777.035)
=0.06278609 / 0.18158143
=0.3458

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)
=(1272.088 / 2777.035) / (1246.22 / 2673.522)
=0.45807417 / 0.46613419
=0.9827

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 - (3751.416 + 3425.548) / 8747.026) / (1 - (2149.344 + 3527.45) / 7336.235)
=0.17949667 / 0.22619791
=0.7935

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
=2673.522 / 2777.035
=0.9627

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))
=(521.707 / (521.707 + 3527.45)) / (495.076 / (495.076 + 3425.548))
=0.12884336 / 0.1262748
=1.0203

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)
=(369.932 / 2673.522) / (356.733 / 2777.035)
=0.13836879 / 0.12845823
=1.0772

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)
=((3620.044 + 423.745) / 8747.026) / ((290.57 + 2409.456) / 7336.235)
=0.46230444 / 0.36803974
=1.2561

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
=(168.49 - 32.159 - 751.849) / 8747.026
=-0.0704

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.

EchoStar Corp has a M-score of -3.63 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.

EchoStar Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 6.8711.58180.49771.34010.98530.99190.76831.20561.2589
GMI 0.29860.88880.95380.77170.93521.00920.85680.89790.9091
AQI 0.49081.47871.08111.00310.98630.99930.88880.96650.7779
SGI 1.39280.88521.23471.17491.13051.05151.04970.91240.8501
DEPI 0.23771.10551.07721.12880.91220.89711.11921.10731.1273
SGAI 1.38711.02930.82911.79811.08690.92380.97911.10221.1555
LVGI 5.45820.9550.85792.49010.97850.9530.90250.94961.2389
TATA -0.2005-0.0744-0.0959-0.0703-0.0804-0.0729-0.0965-0.0833-0.072
M-score 0.15-2.24-3.09-3.07-2.81-2.76-3.17-2.81-2.94

EchoStar Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.76830.77620.87950.93111.20561.44811.40871.40411.25890.3458
GMI 0.85680.84560.85850.87190.89790.86380.8810.9090.90910.9827
AQI 0.88880.94090.98450.97560.96650.9750.9250.77410.77790.7935
SGI 1.04971.03170.99080.93760.91240.81240.82270.85160.85010.9627
DEPI 1.11920.99821.04021.07391.10731.13521.13891.15231.12731.0203
SGAI 0.97911.04251.08591.11591.10221.14851.15091.14551.15551.0772
LVGI 0.90250.95470.93820.93160.94960.93650.95911.23871.23891.2561
TATA -0.0965-0.0958-0.0936-0.0859-0.0833-0.0768-0.077-0.0628-0.072-0.0704
M-score -3.17-3.20-3.11-3.07-2.81-2.67-2.71-2.76-2.94-3.63
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