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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.
ARC Document Solutions Inc has a M-score of -2.98 suggests that the company is not a manipulator.
During the past 6 years, the highest Beneish M-Score of ARC Document Solutions Inc was -2.98. The lowest was -4.32. And the median was -3.30.
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 ARC Document Solutions 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 * 1.0834||+||0.528 * 0.9219||+||0.404 * 0.9833||+||0.892 * 1.0027||+||0.115 * 1.0774|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0373||+||4.679 * -0.1121||-||0.327 * 1.026|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $56.3 Mil.|
Revenue was 101.285 + 101.252 + 104.622 + 100.036 = $407.2 Mil.
Gross Profit was 33.467 + 32.88 + 35.611 + 32.379 = $134.3 Mil.
Total Current Assets was $106.4 Mil.
Total Assets was $409.9 Mil.
Property, Plant and Equipment(Net PPE) was $56.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $34.7 Mil.
Selling, General & Admin. Expense(SGA) was $96.8 Mil.
Total Current Liabilities was $77.7 Mil.
Long-Term Debt was $198.2 Mil.
Net Income was -16.01 + -0.45 + 0.722 + 0.415 = $-15.3 Mil.
Non Operating Income was -16.409 + 0.237 + -0.035 + 0.026 = $-16.2 Mil.
Cash Flow from Operations was 6.788 + 20.019 + 8.11 + 11.881 = $46.8 Mil.
|Accounts Receivable was $51.9 Mil.
Revenue was 96.891 + 99.426 + 106.228 + 103.573 = $406.1 Mil.
Gross Profit was 28.64 + 29.248 + 33.753 + 31.878 = $123.5 Mil.
Total Current Assets was $104.2 Mil.
Total Assets was $415.8 Mil.
Property, Plant and Equipment(Net PPE) was $56.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $39.5 Mil.
Selling, General & Admin. Expense(SGA) was $93.1 Mil.
Total Current Liabilities was $63.6 Mil.
Long-Term Debt was $209.3 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)|
|=||(56.328 / 407.195)||/||(51.855 / 406.118)|
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)|
|=||(32.88 / 406.118)||/||(33.467 / 407.195)|
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 - (106.43 + 56.181) / 409.922)||/||(1 - (104.223 + 56.471) / 415.839)|
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))|
|=||(39.522 / (39.522 + 56.471))||/||(34.745 / (34.745 + 56.181))|
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)|
|=||(96.8 / 407.195)||/||(93.073 / 406.118)|
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)|
|=||((198.228 + 77.725) / 409.922)||/||((209.262 + 63.573) / 415.839)|
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|
|=||(-15.323 - -16.181||-||46.798)||/||409.922|
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.
ARC Document Solutions Inc has a M-score of -2.98 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
ARC Document Solutions Inc Annual Data
ARC Document Solutions Inc Quarterly Data