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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 0.99. The lowest was -3.93. And the median was -2.91.
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 * 1.2224||+||0.528 * 0.9819||+||0.404 * 0.9644||+||0.892 * 1.0413||+||0.115 * 0.9291|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8953||+||4.679 * -0.133||-||0.327 * 0.9271|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $62.5 Mil.|
Revenue was 103.264 + 100.664 + 98.982 + 100.37 = $403.3 Mil.
Gross Profit was 72.762 + 71.3 + 69.098 + 70.579 = $283.7 Mil.
Total Current Assets was $151.7 Mil.
Total Assets was $424.8 Mil.
Property, Plant and Equipment(Net PPE) was $26.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $22.2 Mil.
Selling, General & Admin. Expense(SGA) was $127.3 Mil.
Total Current Liabilities was $262.5 Mil.
Long-Term Debt was $185.0 Mil.
Net Income was 5.048 + 14.704 + 11.983 + 12.639 = $44.4 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 6.611 + 43.581 + 28.263 + 22.439 = $100.9 Mil.
|Accounts Receivable was $49.1 Mil.
Revenue was 96.804 + 97.579 + 96.767 + 96.123 = $387.3 Mil.
Gross Profit was 68.322 + 68.524 + 64.976 + 65.727 = $267.5 Mil.
Total Current Assets was $148.2 Mil.
Total Assets was $452.2 Mil.
Property, Plant and Equipment(Net PPE) was $31.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $23.5 Mil.
Selling, General & Admin. Expense(SGA) was $136.5 Mil.
Total Current Liabilities was $238.9 Mil.
Long-Term Debt was $275.0 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)|
|=||(62.495 / 403.28)||/||(49.097 / 387.273)|
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)|
|=||(71.3 / 387.273)||/||(72.762 / 403.28)|
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 - (151.731 + 26.07) / 424.826)||/||(1 - (148.153 + 31.417) / 452.214)|
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))|
|=||(23.468 / (23.468 + 31.417))||/||(22.225 / (22.225 + 26.07))|
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)|
|=||(127.285 / 403.28)||/||(136.525 / 387.273)|
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)|
|=||((185 + 262.532) / 424.826)||/||((275 + 238.856) / 452.214)|
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|
|=||(44.374 - 0||-||100.894)||/||424.826|
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 -2.85 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