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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.
Constant Contact Inc has a M-score of -2.29 suggests that the company is not a manipulator.
During the past 12 years, the highest Beneish M-Score of Constant Contact Inc was 3.49. The lowest was -3.34. And the median was -2.29.
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 * 1.7338||+||0.528 * 0.9868||+||0.404 * 0.8531||+||0.892 * 1.1368||+||0.115 * 0.9063|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9347||+||4.679 * -0.1246||-||0.327 * 0.8745|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|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 $152.1 Mil.
Total Current Liabilities was $55.8 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 0.848 + 4.036 + 3.602 + 0.09 = $8.6 Mil.
Non Operating Income was 0 + 0.081 + 0 + 0 = $0.1 Mil.
Cash Flow from Operations was 11.091 + 12.963 + 13.659 + 7.428 = $45.1 Mil.
|Accounts Receivable was $0.1 Mil.
Revenue was 68.205 + 66.298 + 63.846 + 62.072 = $260.4 Mil.
Gross Profit was 48.297 + 47.506 + 45.124 + 43.638 = $184.6 Mil.
Total Current Assets was $107.0 Mil.
Total Assets was $266.6 Mil.
Property, Plant and Equipment(Net PPE) was $40.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $19.8 Mil.
Selling, General & Admin. Expense(SGA) was $143.2 Mil.
Total Current Liabilities was $57.8 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)|
|=||(0.136 / 296.052)||/||(0.069 / 260.421)|
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)|
|=||(54.279 / 260.421)||/||(57.147 / 296.052)|
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 - (141.798 + 39.873) / 294.196)||/||(1 - (107.047 + 40.008) / 266.578)|
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))|
|=||(19.833 / (19.833 + 40.008))||/||(22.987 / (22.987 + 39.873))|
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)|
|=||(152.129 / 296.052)||/||(143.168 / 260.421)|
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 + 55.812) / 294.196)||/||((0 + 57.831) / 266.578)|
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|
|=||(8.576 - 0.081||-||45.141)||/||294.196|
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 -2.29 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