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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.
Advent Software Inc has a M-score of -2.75 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Advent Software Inc was 0.99. The lowest was -4.08. And the median was -2.88.
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 Advent Software 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 * 0.9952||+||0.528 * 0.9678||+||0.404 * 1.705||+||0.892 * 1.0559||+||0.115 * 1.053|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8797||+||4.679 * -0.1293||-||0.327 * 1.0213|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $58.2 Mil.|
Revenue was 100.37 + 96.804 + 97.579 + 96.767 = $391.5 Mil.
Gross Profit was 70.579 + 68.322 + 68.524 + 64.976 = $272.4 Mil.
Total Current Assets was $150.9 Mil.
Total Assets was $452.2 Mil.
Property, Plant and Equipment(Net PPE) was $31.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $22.5 Mil.
Selling, General & Admin. Expense(SGA) was $119.7 Mil.
Total Current Liabilities was $250.2 Mil.
Long-Term Debt was $260.0 Mil.
Net Income was 12.639 + 10.886 + 10.999 + 9.813 = $44.3 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 22.439 + 20.875 + 36.663 + 22.835 = $102.8 Mil.
|Accounts Receivable was $55.4 Mil.
Revenue was 96.123 + 92.49 + 92.017 + 90.174 = $370.8 Mil.
Gross Profit was 65.727 + 64.011 + 62.578 + 57.361 = $249.7 Mil.
Total Current Assets was $503.2 Mil.
Total Assets was $824.6 Mil.
Property, Plant and Equipment(Net PPE) was $32.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $25.7 Mil.
Selling, General & Admin. Expense(SGA) was $128.8 Mil.
Total Current Liabilities was $706.0 Mil.
Long-Term Debt was $205.0 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(58.188 / 391.52)||/||(55.375 / 370.804)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(68.322 / 370.804)||/||(70.579 / 391.52)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (150.929 + 31.585) / 452.225)||/||(1 - (503.214 + 32.917) / 824.57)|
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.
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))|
|=||(25.701 / (25.701 + 32.917))||/||(22.534 / (22.534 + 31.585))|
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)|
|=||(119.679 / 391.52)||/||(128.849 / 370.804)|
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)|
|=||((260 + 250.247) / 452.225)||/||((205 + 705.959) / 824.57)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(44.337 - 0||-||102.812)||/||452.225|
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.
Advent Software Inc has a M-score of -2.75 suggests that the company will not be a manipulator.
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
Advent Software Inc Annual Data
Advent Software Inc Quarterly Data