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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 -3.00 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 -4.57. And the median was -3.18.
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 * 0.9814||+||0.528 * 0.927||+||0.404 * 0.9996||+||0.892 * 1.0272||+||0.115 * 1.0346|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0583||+||4.679 * -0.1033||-||0.327 * 1.0007|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $63.6 Mil.|
Revenue was 108.982 + 100.373 + 101.285 + 101.252 = $411.9 Mil.
Gross Profit was 39.207 + 33.934 + 33.467 + 32.88 = $139.5 Mil.
Total Current Assets was $111.8 Mil.
Total Assets was $414.9 Mil.
Property, Plant and Equipment(Net PPE) was $57.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $34.3 Mil.
Selling, General & Admin. Expense(SGA) was $102.5 Mil.
Total Current Liabilities was $74.4 Mil.
Long-Term Debt was $197.0 Mil.
Net Income was 4.545 + 1.396 + -16.01 + -0.45 = $-10.5 Mil.
Non Operating Income was -0.023 + -0.026 + -16.409 + 0.237 = $-16.2 Mil.
Cash Flow from Operations was 14.024 + 7.714 + 6.788 + 20.019 = $48.5 Mil.
|Accounts Receivable was $63.1 Mil.
Revenue was 104.622 + 100.036 + 96.891 + 99.426 = $401.0 Mil.
Gross Profit was 35.611 + 32.379 + 28.64 + 29.248 = $125.9 Mil.
Total Current Assets was $116.9 Mil.
Total Assets was $424.4 Mil.
Property, Plant and Equipment(Net PPE) was $56.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $35.4 Mil.
Selling, General & Admin. Expense(SGA) was $94.3 Mil.
Total Current Liabilities was $68.7 Mil.
Long-Term Debt was $208.7 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)|
|=||(63.622 / 411.892)||/||(63.111 / 400.975)|
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)|
|=||(33.934 / 400.975)||/||(39.207 / 411.892)|
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 - (111.778 + 57.923) / 414.927)||/||(1 - (116.902 + 56.552) / 424.366)|
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))|
|=||(35.422 / (35.422 + 56.552))||/||(34.349 / (34.349 + 57.923))|
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)|
|=||(102.525 / 411.892)||/||(94.307 / 400.975)|
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)|
|=||((196.977 + 74.446) / 414.927)||/||((208.722 + 68.677) / 424.366)|
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|
|=||(-10.519 - -16.221||-||48.545)||/||414.927|
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 -3.00 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