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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.
During the past 13 years, the highest Beneish M-Score of Advent Software Inc was 0.66. The lowest was -3.93. And the median was -2.90.
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 * 1.0169||+||0.528 * 0.9766||+||0.404 * 0.9687||+||0.892 * 1.0362||+||0.115 * 1.0091|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8511||+||4.679 * -0.1493||-||0.327 * 0.9217|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $61.9 Mil.|
Revenue was 100.664 + 98.982 + 100.37 + 96.804 = $396.8 Mil.
Gross Profit was 71.3 + 69.098 + 70.579 + 68.322 = $279.3 Mil.
Total Current Assets was $151.2 Mil.
Total Assets was $434.9 Mil.
Property, Plant and Equipment(Net PPE) was $28.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.2 Mil.
Selling, General & Admin. Expense(SGA) was $118.0 Mil.
Total Current Liabilities was $273.2 Mil.
Long-Term Debt was $200.0 Mil.
Net Income was 14.704 + 11.983 + 12.639 + 10.886 = $50.2 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 43.581 + 28.263 + 22.439 + 20.875 = $115.2 Mil.
|Accounts Receivable was $58.7 Mil.
Revenue was 97.579 + 96.767 + 96.123 + 92.49 = $383.0 Mil.
Gross Profit was 68.524 + 64.976 + 65.727 + 64.011 = $263.2 Mil.
Total Current Assets was $147.7 Mil.
Total Assets was $456.3 Mil.
Property, Plant and Equipment(Net PPE) was $31.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $24.4 Mil.
Selling, General & Admin. Expense(SGA) was $133.8 Mil.
Total Current Liabilities was $253.7 Mil.
Long-Term Debt was $285.0 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)|
|=||(61.87 / 396.82)||/||(58.717 / 382.959)|
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)|
|=||(69.098 / 382.959)||/||(71.3 / 396.82)|
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 - (151.211 + 27.995) / 434.869)||/||(1 - (147.657 + 31.698) / 456.294)|
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))|
|=||(24.393 / (24.393 + 31.698))||/||(21.201 / (21.201 + 27.995))|
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)|
|=||(118.007 / 396.82)||/||(133.802 / 382.959)|
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)|
|=||((200 + 273.18) / 434.869)||/||((285 + 253.68) / 456.294)|
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|
|=||(50.212 - 0||-||115.158)||/||434.869|
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 -3.10 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