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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 -2.89.
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 * 1.1619||+||0.528 * 1.0173||+||0.404 * 0.7899||+||0.892 * 1.2423||+||0.115 * 1.1698|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0773||+||4.679 * -0.1371||-||0.327 * 0.8133|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $42.4 Mil.|
Revenue was 41.614 + 39.745 + 38.126 + 35 = $154.5 Mil.
Gross Profit was 25.711 + 23.726 + 23.262 + 19.354 = $92.1 Mil.
Total Current Assets was $144.1 Mil.
Total Assets was $229.4 Mil.
Property, Plant and Equipment(Net PPE) was $19.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $10.9 Mil.
Selling, General & Admin. Expense(SGA) was $85.6 Mil.
Total Current Liabilities was $93.1 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -4.724 + -4.043 + -4.109 + -5.235 = $-18.1 Mil.
Non Operating Income was 0 + 0 + 0 + -0.02 = $-0.0 Mil.
Cash Flow from Operations was 2.648 + 8.003 + -0.965 + 3.67 = $13.4 Mil.
|Accounts Receivable was $29.4 Mil.
Revenue was 32.515 + 30.977 + 30.187 + 30.678 = $124.4 Mil.
Gross Profit was 19.385 + 18.579 + 18.521 + 18.9 = $75.4 Mil.
Total Current Assets was $78.0 Mil.
Total Assets was $143.9 Mil.
Property, Plant and Equipment(Net PPE) was $13.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.8 Mil.
Selling, General & Admin. Expense(SGA) was $64.0 Mil.
Total Current Liabilities was $68.2 Mil.
Long-Term Debt was $3.7 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)|
|=||(42.385 / 154.485)||/||(29.366 / 124.357)|
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)|
|=||(23.726 / 124.357)||/||(25.711 / 154.485)|
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 - (144.139 + 19.454) / 229.41)||/||(1 - (77.998 + 13.637) / 143.903)|
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))|
|=||(9.849 / (9.849 + 13.637))||/||(10.871 / (10.871 + 19.454))|
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)|
|=||(85.591 / 154.485)||/||(63.956 / 124.357)|
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 + 93.123) / 229.41)||/||((3.65 + 68.17) / 143.903)|
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|
|=||(-18.111 - -0.02||-||13.356)||/||229.41|
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 -2.76 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