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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 Callidus Software Inc was 2.47. The lowest was -4.14. And the median was -2.90.
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 Callidus Software 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 * 1.1666||+||0.528 * 1.0117||+||0.404 * 0.7191||+||0.892 * 1.2345||+||0.115 * 1.1494|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0467||+||4.679 * -0.1045||-||0.327 * 0.7136|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $38.2 Mil.|
Revenue was 39.745 + 38.126 + 35 + 32.515 = $145.4 Mil.
Gross Profit was 23.726 + 23.262 + 19.354 + 19.385 = $85.7 Mil.
Total Current Assets was $150.1 Mil.
Total Assets was $237.4 Mil.
Property, Plant and Equipment(Net PPE) was $20.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $10.8 Mil.
Selling, General & Admin. Expense(SGA) was $78.6 Mil.
Total Current Liabilities was $90.5 Mil.
Long-Term Debt was $10.5 Mil.
Net Income was -4.043 + -4.109 + -5.235 + 0.25 = $-13.1 Mil.
Non Operating Income was 0 + 0 + -0.02 + 0 = $-0.0 Mil.
Cash Flow from Operations was 8.003 + -0.965 + 3.67 + 0.977 = $11.7 Mil.
|Accounts Receivable was $26.5 Mil.
Revenue was 30.977 + 30.187 + 30.678 + 25.93 = $117.8 Mil.
Gross Profit was 18.579 + 18.521 + 18.9 + 14.26 = $70.3 Mil.
Total Current Assets was $70.7 Mil.
Total Assets was $139.9 Mil.
Property, Plant and Equipment(Net PPE) was $14.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.5 Mil.
Selling, General & Admin. Expense(SGA) was $60.9 Mil.
Total Current Liabilities was $68.5 Mil.
Long-Term Debt was $14.9 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)|
|=||(38.178 / 145.386)||/||(26.509 / 117.772)|
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)|
|=||(23.262 / 117.772)||/||(23.726 / 145.386)|
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 - (150.131 + 20.645) / 237.367)||/||(1 - (70.747 + 14.545) / 139.853)|
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))|
|=||(9.453 / (9.453 + 14.545))||/||(10.764 / (10.764 + 20.645))|
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)|
|=||(78.626 / 145.386)||/||(60.85 / 117.772)|
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)|
|=||((10.48 + 90.514) / 237.367)||/||((14.865 + 68.521) / 139.853)|
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|
|=||(-13.137 - -0.02||-||11.685)||/||237.367|
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.
Callidus Software Inc has a M-score of -2.61 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
Callidus Software Inc Annual Data
Callidus Software Inc Quarterly Data