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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 Constant Contact Inc was 3.49. The lowest was -3.35. 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 Constant Contact 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 * 1.2368||+||0.528 * 0.9881||+||0.404 * 0.8048||+||0.892 * 1.1593||+||0.115 * 1.0325|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9787||+||4.679 * -0.1461||-||0.327 * 0.9759|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $0.2 Mil.|
Revenue was 90.417 + 88.054 + 83.494 + 81.256 = $343.2 Mil.
Gross Profit was 65.986 + 64.041 + 60.271 + 59.156 = $249.5 Mil.
Total Current Assets was $191.1 Mil.
Total Assets was $340.1 Mil.
Property, Plant and Equipment(Net PPE) was $44.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $24.3 Mil.
Selling, General & Admin. Expense(SGA) was $172.7 Mil.
Total Current Liabilities was $63.0 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 3.55 + 6.248 + 5.198 + 2.021 = $17.0 Mil.
Non Operating Income was 0 + 0.172 + 0 + 0 = $0.2 Mil.
Cash Flow from Operations was 20.221 + 16.107 + 18.347 + 11.869 = $66.5 Mil.
|Accounts Receivable was $0.1 Mil.
Revenue was 78.874 + 74.931 + 72.039 + 70.208 = $296.1 Mil.
Gross Profit was 57.147 + 54.279 + 51.561 + 49.63 = $212.6 Mil.
Total Current Assets was $141.8 Mil.
Total Assets was $294.2 Mil.
Property, Plant and Equipment(Net PPE) was $39.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $23.0 Mil.
Selling, General & Admin. Expense(SGA) was $152.2 Mil.
Total Current Liabilities was $55.8 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)|
|=||(0.195 / 343.221)||/||(0.136 / 296.052)|
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)|
|=||(64.041 / 296.052)||/||(65.986 / 343.221)|
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 - (191.077 + 44.32) / 340.086)||/||(1 - (141.798 + 39.873) / 294.196)|
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))|
|=||(22.987 / (22.987 + 39.873))||/||(24.306 / (24.306 + 44.32))|
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)|
|=||(172.669 / 343.221)||/||(152.183 / 296.052)|
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 + 62.96) / 340.086)||/||((0 + 55.812) / 294.196)|
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|
|=||(17.017 - 0.172||-||66.544)||/||340.086|
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.
Constant Contact Inc has a M-score of -2.87 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
Constant Contact Inc Annual Data
Constant Contact Inc Quarterly Data