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Empire District Electric Co (NYSE:EDE)
Beneish M-Score
-3.03 (As of Today)

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.

Empire District Electric Co has a M-score of -3.03 suggests that the company is not a manipulator.

EDE' s 10-Year Beneish M-Score Range
Min: -4.56   Max: -2.59
Current: -3.03

-4.56
-2.59

During the past 13 years, the highest Beneish M-Score of Empire District Electric Co was -2.59. The lowest was -4.56. And the median was -2.96.


Definition

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 Empire District Electric Co 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 * 0.8819+0.528 * 1.0054+0.404 * 0.7228+0.892 * 1.104+0.115 * 0.9287
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 2.2015+4.679 * -0.0407-0.327 * 1.0605
=-3.03

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $84.4 Mil.
Revenue was 149.782 + 179.673 + 149.058 + 157.486 = $636.0 Mil.
Gross Profit was 65.137 + 81.085 + 70.816 + 85.331 = $302.4 Mil.
Total Current Assets was $178.8 Mil.
Total Assets was $2,207.8 Mil.
Property, Plant and Equipment(Net PPE) was $1,816.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $76.0 Mil.
Selling, General & Admin. Expense(SGA) was $23.0 Mil.
Total Current Liabilities was $152.8 Mil.
Long-Term Debt was $743.3 Mil.
Net Income was 11.194 + 20.905 + 15.162 + 23.996 = $71.3 Mil.
Non Operating Income was 2.097 + 1.701 + 1.026 + 0.795 = $5.6 Mil.
Cash Flow from Operations was 14.472 + 54.572 + 39.81 + 46.636 = $155.5 Mil.
Accounts Receivable was $86.7 Mil.
Revenue was 136.646 + 151.14 + 129.12 + 159.202 = $576.1 Mil.
Gross Profit was 64.873 + 66.775 + 57.843 + 85.877 = $275.4 Mil.
Total Current Assets was $179.2 Mil.
Total Assets was $2,168.6 Mil.
Property, Plant and Equipment(Net PPE) was $1,700.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $65.9 Mil.
Selling, General & Admin. Expense(SGA) was $9.5 Mil.
Total Current Liabilities was $86.5 Mil.
Long-Term Debt was $743.5 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(84.361 / 635.999) / (86.655 / 576.108)
=0.13264329 / 0.15041451
=0.8819

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(81.085 / 576.108) / (65.137 / 635.999)
=0.47797982 / 0.4754237
=1.0054

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (178.762 + 1816.193) / 2207.781) / (1 - (179.245 + 1700.16) / 2168.637)
=0.09639815 / 0.13337041
=0.7228

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=635.999 / 576.108
=1.104

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))
=(65.867 / (65.867 + 1700.16)) / (75.993 / (75.993 + 1816.193))
=0.03729671 / 0.04016149
=0.9287

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)
=(22.969 / 635.999) / (9.451 / 576.108)
=0.03611484 / 0.01640491
=2.2015

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)
=((743.311 + 152.823) / 2207.781) / ((743.541 + 86.5) / 2168.637)
=0.40589805 / 0.38274778
=1.0605

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(71.257 - 5.619 - 155.49) / 2207.781
=-0.0407

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.

Empire District Electric Co has a M-score of -3.03 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Empire District Electric Co Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.10011.1391.05340.961.00821.02190.81870.98971.1179
GMI 1.05721.1380.88991.0020.92740.95210.93730.97740.9831
AQI 0.9681.27641.19260.91351.02390.95651.1360.97190.7551
SGI 0.94531.17891.13631.18920.95951.08871.06580.96571.0668
DEPI 0.95090.93341.05730.86361.02580.9150.91951.18181.0439
SGAI 3.16730.3162.761300.99370.99451.009516.82851.0962
LVGI 0.96471.02811.010.98430.93010.92020.93710.97611.0389
TATA -0.0504-0.0467-0.024-0.05-0.0511-0.049-0.0396-0.0483-0.0451
M-score -3.02-2.13-2.70-2.45-2.75-2.64-2.74-5.46-2.66

Empire District Electric Co Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.98540.8819
GMI 0.98191.0054
AQI 0.7260.7228
SGI 1.09061.104
DEPI 0.96290.9287
SGAI 11.42242.2015
LVGI 1.04521.0605
TATA -0.0465-0.0407
M-score -4.56-3.03
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