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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 Cardiovascular Systems Inc was 126.04. The lowest was -4.85. And the median was -2.31.
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 Cardiovascular Systems 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 * 1.1676||+||0.528 * 0.9865||+||0.404 * 1.2492||+||0.892 * 1.3717||+||0.115 * 5.0766|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9315||+||4.679 * -0.0561||-||0.327 * 1.2106|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $31.2 Mil.|
Revenue was 47.004 + 44.732 + 41.354 + 39.564 = $172.7 Mil.
Gross Profit was 36.588 + 35.386 + 32.469 + 30.449 = $134.9 Mil.
Total Current Assets was $141.8 Mil.
Total Assets was $178.6 Mil.
Property, Plant and Equipment(Net PPE) was $32.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.8 Mil.
Selling, General & Admin. Expense(SGA) was $139.1 Mil.
Total Current Liabilities was $33.9 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -10.656 + -5.273 + -8.224 + -9.628 = $-33.8 Mil.
Non Operating Income was -0.112 + -0.015 + -0.018 + 0.012 = $-0.1 Mil.
Cash Flow from Operations was -3.968 + -6.643 + -4.474 + -8.542 = $-23.6 Mil.
|Accounts Receivable was $19.5 Mil.
Revenue was 34.945 + 32.337 + 29.766 + 28.821 = $125.9 Mil.
Gross Profit was 27.196 + 25.024 + 22.902 + 21.892 = $97.0 Mil.
Total Current Assets was $178.4 Mil.
Total Assets was $185.5 Mil.
Property, Plant and Equipment(Net PPE) was $3.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.2 Mil.
Selling, General & Admin. Expense(SGA) was $108.9 Mil.
Total Current Liabilities was $29.1 Mil.
Long-Term Debt was $0.0 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)|
|=||(31.22 / 172.654)||/||(19.493 / 125.869)|
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)|
|=||(35.386 / 125.869)||/||(36.588 / 172.654)|
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 - (141.828 + 32.359) / 178.626)||/||(1 - (178.379 + 3.42) / 185.489)|
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))|
|=||(1.224 / (1.224 + 3.42))||/||(1.772 / (1.772 + 32.359))|
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)|
|=||(139.141 / 172.654)||/||(108.894 / 125.869)|
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 + 33.883) / 178.626)||/||((0 + 29.065) / 185.489)|
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|
|=||(-33.781 - -0.133||-||-23.627)||/||178.626|
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.
Cardiovascular Systems Inc has a M-score of -1.75 signals that the company is likely to 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
Cardiovascular Systems Inc Annual Data
Cardiovascular Systems Inc Quarterly Data