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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.
Cardiovascular Systems, Inc. has a M-score of -2.63 suggests that the company is not a manipulator.
During the past 12 years, the highest Beneish M-Score of Cardiovascular Systems, Inc. was 125.72. The lowest was -4.85. And the median was -2.63.
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 * 0.9655||+||0.528 * 1.0011||+||0.404 * 0.2962||+||0.892 * 1.2662||+||0.115 * 1.0444|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0337||+||4.679 * -0.0658||-||0.327 * 0.284|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $15.9 Mil.|
Revenue was 32.337 + 29.766 + 28.821 + 26.474 = $117.4 Mil.
Gross Profit was 25.024 + 22.902 + 21.892 + 20.233 = $90.1 Mil.
Total Current Assets was $174.3 Mil.
Total Assets was $181.0 Mil.
Property, Plant and Equipment(Net PPE) was $3.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.2 Mil.
Selling, General & Admin. Expense(SGA) was $99.1 Mil.
Total Current Liabilities was $24.8 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -8.658 + -7.292 + -6.841 + -6.219 = $-29.0 Mil.
Non Operating Income was -0.604 + -0.171 + 0.133 + -0.486 = $-1.1 Mil.
Cash Flow from Operations was -6.87 + -5.618 + -1.401 + -2.077 = $-16.0 Mil.
|Accounts Receivable was $13.0 Mil.
Revenue was 25.309 + 23.293 + 22.907 + 21.205 = $92.7 Mil.
Gross Profit was 19.351 + 18.039 + 17.729 + 16.073 = $71.2 Mil.
Total Current Assets was $50.5 Mil.
Total Assets was $56.6 Mil.
Property, Plant and Equipment(Net PPE) was $2.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.9 Mil.
Selling, General & Admin. Expense(SGA) was $75.7 Mil.
Total Current Liabilities was $16.9 Mil.
Long-Term Debt was $10.4 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)|
|=||(15.918 / 117.398)||/||(13.02 / 92.714)|
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)|
|=||(22.902 / 92.714)||/||(25.024 / 117.398)|
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 - (174.341 + 3.088) / 181.004)||/||(1 - (50.528 + 2.342) / 56.647)|
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))|
|=||(0.927 / (0.927 + 2.342))||/||(1.151 / (1.151 + 3.088))|
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)|
|=||(99.116 / 117.398)||/||(75.724 / 92.714)|
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 + 24.804) / 181.004)||/||((10.4 + 16.938) / 56.647)|
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|
|=||(-29.01 - -1.128||-||-15.966)||/||181.004|
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 -2.63 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
Cardiovascular Systems, Inc. Annual Data
Cardiovascular Systems, Inc. Quarterly Data