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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 -2.64 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 * 1.3729||+||0.528 * 0.9809||+||0.404 * 0.822||+||0.892 * 1.1435||+||0.115 * 0.9695|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9359||+||4.679 * -0.1281||-||0.327 * 0.8742|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $0.2 Mil.|
Revenue was 81.256 + 78.874 + 74.931 + 72.039 = $307.1 Mil.
Gross Profit was 59.156 + 57.147 + 54.279 + 51.561 = $222.1 Mil.
Total Current Assets was $151.1 Mil.
Total Assets was $305.6 Mil.
Property, Plant and Equipment(Net PPE) was $42.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $23.2 Mil.
Selling, General & Admin. Expense(SGA) was $157.6 Mil.
Total Current Liabilities was $55.8 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 2.021 + 0.848 + 4.036 + 3.602 = $10.5 Mil.
Non Operating Income was 0 + 0 + 0.081 + 0 = $0.1 Mil.
Cash Flow from Operations was 11.869 + 11.091 + 12.963 + 13.665 = $49.6 Mil.
|Accounts Receivable was $0.1 Mil.
Revenue was 70.208 + 68.205 + 66.298 + 63.846 = $268.6 Mil.
Gross Profit was 49.63 + 48.297 + 47.506 + 45.124 = $190.6 Mil.
Total Current Assets was $108.5 Mil.
Total Assets was $267.7 Mil.
Property, Plant and Equipment(Net PPE) was $40.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $20.8 Mil.
Selling, General & Admin. Expense(SGA) was $147.2 Mil.
Total Current Liabilities was $56.0 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)|
|=||(0.157 / 307.1)||/||(0.1 / 268.557)|
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)|
|=||(57.147 / 268.557)||/||(59.156 / 307.1)|
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 - (151.127 + 42.707) / 305.607)||/||(1 - (108.532 + 40.04) / 267.674)|
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))|
|=||(20.785 / (20.785 + 40.04))||/||(23.247 / (23.247 + 42.707))|
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)|
|=||(157.576 / 307.1)||/||(147.231 / 268.557)|
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 + 55.843) / 305.607)||/||((0 + 55.951) / 267.674)|
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|
|=||(10.507 - 0.081||-||49.588)||/||305.607|
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 -2.64 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