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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 -2.69.
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 * 0.9066||+||0.528 * 1.0022||+||0.404 * 0.9602||+||0.892 * 1.2119||+||0.115 * 0.9071|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9674||+||4.679 * -0.1502||-||0.327 * 0.9385|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $140 Mil.|
Revenue was 261.939 + 256.149 + 257.532 + 236.068 = $1,012 Mil.
Gross Profit was 158.048 + 150.76 + 160.279 + 141.218 = $610 Mil.
Total Current Assets was $307 Mil.
Total Assets was $1,120 Mil.
Property, Plant and Equipment(Net PPE) was $328 Mil.
Depreciation, Depletion and Amortization(DDA) was $130 Mil.
Selling, General & Admin. Expense(SGA) was $400 Mil.
Total Current Liabilities was $183 Mil.
Long-Term Debt was $280 Mil.
Net Income was -1.915 + -0.833 + 7.715 + 5.795 = $11 Mil.
Non Operating Income was 0.005 + 0.042 + 0.023 + 7.59 = $8 Mil.
Cash Flow from Operations was 73.69 + 8.305 + 60.925 + 28.339 = $171 Mil.
|Accounts Receivable was $127 Mil.
Revenue was 224.694 + 206.434 + 213.214 + 190.428 = $835 Mil.
Gross Profit was 134.795 + 121.877 + 136.94 + 111.085 = $505 Mil.
Total Current Assets was $280 Mil.
Total Assets was $1,052 Mil.
Property, Plant and Equipment(Net PPE) was $298 Mil.
Depreciation, Depletion and Amortization(DDA) was $103 Mil.
Selling, General & Admin. Expense(SGA) was $341 Mil.
Total Current Liabilities was $168 Mil.
Long-Term Debt was $296 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)|
|=||(139.829 / 1011.688)||/||(127.263 / 834.77)|
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)|
|=||(504.697 / 834.77)||/||(610.305 / 1011.688)|
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 - (307.224 + 327.912) / 1119.765)||/||(1 - (279.758 + 298.195) / 1052.202)|
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))|
|=||(103.231 / (103.231 + 298.195))||/||(129.747 / (129.747 + 327.912))|
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)|
|=||(400.068 / 1011.688)||/||(341.224 / 834.77)|
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)|
|=||((280.088 + 183.381) / 1119.765)||/||((296.25 + 167.788) / 1052.202)|
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|
|=||(10.762 - 7.66||-||171.259)||/||1119.765|
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 -3.08 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