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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 athenahealth Inc was -0.40. The lowest was -3.19. And the median was -2.67.
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 athenahealth 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 * 1.0138||+||0.528 * 1.0031||+||0.404 * 0.9156||+||0.892 * 1.2242||+||0.115 * 0.9311|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9437||+||4.679 * -0.1529||-||0.327 * 1.0089|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $147.3 Mil.|
Revenue was 256.149 + 257.532 + 236.068 + 224.694 = $974.4 Mil.
Gross Profit was 150.76 + 160.279 + 141.218 + 134.795 = $587.1 Mil.
Total Current Assets was $283.1 Mil.
Total Assets was $1,085.3 Mil.
Property, Plant and Equipment(Net PPE) was $323.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $124.5 Mil.
Selling, General & Admin. Expense(SGA) was $383.4 Mil.
Total Current Liabilities was $161.3 Mil.
Long-Term Debt was $283.7 Mil.
Net Income was -0.833 + 7.715 + 5.795 + 9.349 = $22.0 Mil.
Non Operating Income was 0.042 + 0.023 + 7.59 + 21.081 = $28.7 Mil.
Cash Flow from Operations was 8.305 + 60.925 + 28.339 + 61.656 = $159.2 Mil.
|Accounts Receivable was $118.7 Mil.
Revenue was 206.434 + 213.214 + 190.428 + 185.922 = $796.0 Mil.
Gross Profit was 121.877 + 136.94 + 111.085 + 111.148 = $481.1 Mil.
Total Current Assets was $219.0 Mil.
Total Assets was $968.9 Mil.
Property, Plant and Equipment(Net PPE) was $282.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $98.9 Mil.
Selling, General & Admin. Expense(SGA) was $331.9 Mil.
Total Current Liabilities was $128.8 Mil.
Long-Term Debt was $265.0 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)|
|=||(147.254 / 974.443)||/||(118.656 / 795.998)|
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)|
|=||(481.05 / 795.998)||/||(587.052 / 974.443)|
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 - (283.128 + 323.094) / 1085.312)||/||(1 - (218.954 + 282.837) / 968.947)|
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))|
|=||(98.888 / (98.888 + 282.837))||/||(124.536 / (124.536 + 323.094))|
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)|
|=||(383.416 / 974.443)||/||(331.873 / 795.998)|
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)|
|=||((283.721 + 161.322) / 1085.312)||/||((265 + 128.806) / 968.947)|
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|
|=||(22.026 - 28.736||-||159.225)||/||1085.312|
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.
athenahealth Inc has a M-score of -3.02 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
athenahealth Inc Annual Data
athenahealth Inc Quarterly Data