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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.
AVG Technologies NV has a M-score of -3.77 suggests that the company is not a manipulator.
During the past 5 years, the highest Beneish M-Score of AVG Technologies NV was -3.70. The lowest was -3.92. 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 * 0.74||+||0.528 * 1.023||+||0.404 * 1.0616||+||0.892 * 1.0483||+||0.115 * 0.937|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.901||+||4.679 * -0.2508||-||0.327 * 0.9128|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $24.0 Mil.|
Revenue was 93.546 + 101.902 + 100.104 + 100.381 = $395.9 Mil.
Gross Profit was 80.034 + 82.925 + 80.099 + 84.624 = $327.7 Mil.
Total Current Assets was $101.2 Mil.
Total Assets was $288.6 Mil.
Property, Plant and Equipment(Net PPE) was $15.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $27.6 Mil.
Selling, General & Admin. Expense(SGA) was $162.5 Mil.
Total Current Liabilities was $225.7 Mil.
Long-Term Debt was $5.0 Mil.
Net Income was 17.943 + 12.83 + 4.752 + 21.69 = $57.2 Mil.
Non Operating Income was -0.057 + -4.438 + 3.101 + -3.661 = $-5.1 Mil.
Cash Flow from Operations was 32.712 + 32.949 + 24.826 + 44.162 = $134.6 Mil.
|Accounts Receivable was $31.0 Mil.
Revenue was 104.726 + 95.205 + 95.253 + 82.523 = $377.7 Mil.
Gross Profit was 90.62 + 80.632 + 79.911 + 68.619 = $319.8 Mil.
Total Current Assets was $131.7 Mil.
Total Assets was $330.5 Mil.
Property, Plant and Equipment(Net PPE) was $13.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $19.9 Mil.
Selling, General & Admin. Expense(SGA) was $172.0 Mil.
Total Current Liabilities was $224.1 Mil.
Long-Term Debt was $65.4 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)|
|=||(24.04 / 395.933)||/||(30.992 / 377.707)|
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)|
|=||(82.925 / 377.707)||/||(80.034 / 395.933)|
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 - (101.154 + 15.131) / 288.586)||/||(1 - (131.656 + 12.97) / 330.506)|
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))|
|=||(19.851 / (19.851 + 12.97))||/||(27.551 / (27.551 + 15.131))|
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)|
|=||(162.466 / 395.933)||/||(172.01 / 377.707)|
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)|
|=||((5 + 225.748) / 288.586)||/||((65.438 + 224.068) / 330.506)|
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|
|=||(57.215 - -5.055||-||134.649)||/||288.586|
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 -3.77 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