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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 -2.94.
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 * 1.1525||+||0.528 * 0.9104||+||0.404 * 1.0346||+||0.892 * 1.1983||+||0.115 * 0.9627|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0242||+||4.679 * -0.1607||-||0.327 * 0.5993|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $32.2 Mil.|
Revenue was 35 + 32.515 + 30.977 + 30.187 = $128.7 Mil.
Gross Profit was 19.354 + 19.385 + 18.579 + 18.521 = $75.8 Mil.
Total Current Assets was $81.0 Mil.
Total Assets was $161.6 Mil.
Property, Plant and Equipment(Net PPE) was $12.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $10.0 Mil.
Selling, General & Admin. Expense(SGA) was $68.3 Mil.
Total Current Liabilities was $77.2 Mil.
Long-Term Debt was $10.9 Mil.
Net Income was -5.235 + 0.25 + -2.467 + -6.98 = $-14.4 Mil.
Non Operating Income was -0.02 + 0 + 0 + -4.684 = $-4.7 Mil.
Cash Flow from Operations was 3.67 + 0.977 + 5.469 + 6.123 = $16.2 Mil.
|Accounts Receivable was $23.3 Mil.
Revenue was 30.678 + 25.93 + 25.542 + 25.233 = $107.4 Mil.
Gross Profit was 18.9 + 14.26 + 12.867 + 11.593 = $57.6 Mil.
Total Current Assets was $65.2 Mil.
Total Assets was $130.5 Mil.
Property, Plant and Equipment(Net PPE) was $12.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.1 Mil.
Selling, General & Admin. Expense(SGA) was $55.6 Mil.
Total Current Liabilities was $58.1 Mil.
Long-Term Debt was $60.7 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)|
|=||(32.183 / 128.679)||/||(23.304 / 107.383)|
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)|
|=||(19.385 / 107.383)||/||(19.354 / 128.679)|
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 - (81.042 + 12.723) / 161.555)||/||(1 - (65.183 + 12.381) / 130.489)|
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))|
|=||(9.105 / (9.105 + 12.381))||/||(10.004 / (10.004 + 12.723))|
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)|
|=||(68.263 / 128.679)||/||(55.617 / 107.383)|
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)|
|=||((10.928 + 77.236) / 161.555)||/||((60.675 + 58.148) / 130.489)|
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|
|=||(-14.432 - -4.704||-||16.239)||/||161.555|
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 -2.83 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