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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 -3.07. And the median was -2.65.
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 * 0.9907||+||0.528 * 0.9907||+||0.404 * 0.9907||+||0.892 * 1.2287||+||0.115 * 0.9562|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9679||+||4.679 * -0.1596||-||0.327 * 1.1025|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $148.2 Mil.|
Revenue was 257.532 + 236.068 + 224.694 + 206.434 = $924.7 Mil.
Gross Profit was 160.279 + 141.218 + 134.795 + 121.877 = $558.2 Mil.
Total Current Assets was $320.3 Mil.
Total Assets was $1,118.7 Mil.
Property, Plant and Equipment(Net PPE) was $321.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $118.0 Mil.
Selling, General & Admin. Expense(SGA) was $374.5 Mil.
Total Current Liabilities was $193.7 Mil.
Long-Term Debt was $287.4 Mil.
Net Income was 7.715 + 5.795 + 9.349 + -8.832 = $14.0 Mil.
Non Operating Income was 0.023 + 7.59 + 21.081 + 0 = $28.7 Mil.
Cash Flow from Operations was 60.925 + 28.339 + 61.656 + 12.924 = $163.8 Mil.
|Accounts Receivable was $121.7 Mil.
Revenue was 213.214 + 190.428 + 185.922 + 163.035 = $752.6 Mil.
Gross Profit was 136.94 + 111.085 + 111.148 + 90.887 = $450.1 Mil.
Total Current Assets was $258.6 Mil.
Total Assets was $930.6 Mil.
Property, Plant and Equipment(Net PPE) was $271.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $93.8 Mil.
Selling, General & Admin. Expense(SGA) was $314.9 Mil.
Total Current Liabilities was $205.2 Mil.
Long-Term Debt was $157.8 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)|
|=||(148.157 / 924.728)||/||(121.71 / 752.599)|
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)|
|=||(141.218 / 752.599)||/||(160.279 / 924.728)|
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 - (320.26 + 321.524) / 1118.662)||/||(1 - (258.624 + 271.552) / 930.62)|
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))|
|=||(93.806 / (93.806 + 271.552))||/||(118.022 / (118.022 + 321.524))|
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)|
|=||(374.478 / 924.728)||/||(314.88 / 752.599)|
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)|
|=||((287.353 + 193.697) / 1118.662)||/||((157.822 + 205.159) / 930.62)|
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|
|=||(14.027 - 28.694||-||163.844)||/||1118.662|
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 -3.07 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