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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 6 years, the highest Beneish M-Score of AVG Technologies NV was -3.54. The lowest was -3.87. And the median was -3.77.
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 AVG Technologies NV 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 * 0.7864||+||0.528 * 0.9833||+||0.404 * 0.9408||+||0.892 * 0.9385||+||0.115 * 0.884|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9746||+||4.679 * -0.1668||-||0.327 * 0.9549|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $22.3 Mil.|
Revenue was 92.346 + 88.009 + 93.546 + 101.902 = $375.8 Mil.
Gross Profit was 82.168 + 75.54 + 80.034 + 82.925 = $320.7 Mil.
Total Current Assets was $108.5 Mil.
Total Assets was $280.7 Mil.
Property, Plant and Equipment(Net PPE) was $15.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $30.3 Mil.
Selling, General & Admin. Expense(SGA) was $163.2 Mil.
Total Current Liabilities was $216.0 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 18.214 + 13.685 + 17.943 + 12.83 = $62.7 Mil.
Non Operating Income was -1.059 + -0.392 + -0.057 + 4.426 = $2.9 Mil.
Cash Flow from Operations was 18.601 + 22.293 + 32.712 + 32.949 = $106.6 Mil.
|Accounts Receivable was $30.2 Mil.
Revenue was 100.104 + 100.381 + 104.726 + 95.205 = $400.4 Mil.
Gross Profit was 80.099 + 84.624 + 90.62 + 80.632 = $336.0 Mil.
Total Current Assets was $119.2 Mil.
Total Assets was $334.5 Mil.
Property, Plant and Equipment(Net PPE) was $16.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $23.4 Mil.
Selling, General & Admin. Expense(SGA) was $178.4 Mil.
Total Current Liabilities was $234.6 Mil.
Long-Term Debt was $35.0 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)|
|=||(22.284 / 375.803)||/||(30.194 / 400.416)|
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)|
|=||(75.54 / 400.416)||/||(82.168 / 375.803)|
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 - (108.462 + 15.088) / 280.664)||/||(1 - (119.225 + 16.238) / 334.503)|
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))|
|=||(23.39 / (23.39 + 16.238))||/||(30.311 / (30.311 + 15.088))|
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)|
|=||(163.16 / 375.803)||/||(178.377 / 400.416)|
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)|
|=||((0 + 215.998) / 280.664)||/||((35 + 234.585) / 334.503)|
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|
|=||(62.672 - 2.918||-||106.555)||/||280.664|
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.
AVG Technologies NV has a M-score of -3.54 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
AVG Technologies NV Annual Data
AVG Technologies NV Quarterly Data