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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.
Empire District Electric Co has a M-score of -2.76 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Empire District Electric Co was -2.59. The lowest was -3.79. And the median was -2.80.
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 * 0.9132||+||0.528 * 1.0262||+||0.404 * 0.7077||+||0.892 * 1.1317||+||0.115 * 0.933|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.909||+||4.679 * -0.043||-||0.327 * 1.0623|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $68.6 Mil.|
Revenue was 171.512 + 149.782 + 179.673 + 149.058 = $650.0 Mil.
Gross Profit was 86.043 + 65.137 + 81.085 + 70.816 = $303.1 Mil.
Total Current Assets was $186.5 Mil.
Total Assets was $2,255.3 Mil.
Property, Plant and Equipment(Net PPE) was $1,861.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $80.0 Mil.
Selling, General & Admin. Expense(SGA) was $37.6 Mil.
Total Current Liabilities was $185.7 Mil.
Long-Term Debt was $743.3 Mil.
Net Income was 23.892 + 11.194 + 20.905 + 15.162 = $71.2 Mil.
Non Operating Income was 2.563 + 2.097 + 1.701 + -0.369 = $6.0 Mil.
Cash Flow from Operations was 53.332 + 14.472 + 54.572 + 39.81 = $162.2 Mil.
|Accounts Receivable was $66.4 Mil.
Revenue was 157.486 + 136.646 + 151.14 + 129.12 = $574.4 Mil.
Gross Profit was 85.331 + 64.873 + 66.775 + 57.843 = $274.8 Mil.
Total Current Assets was $181.0 Mil.
Total Assets was $2,195.8 Mil.
Property, Plant and Equipment(Net PPE) was $1,729.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $69.2 Mil.
Selling, General & Admin. Expense(SGA) was $36.5 Mil.
Total Current Liabilities was $107.9 Mil.
Long-Term Debt was $743.5 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)|
|=||(68.606 / 650.025)||/||(66.385 / 574.392)|
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)|
|=||(65.137 / 574.392)||/||(86.043 / 650.025)|
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 - (186.509 + 1861.586) / 2255.326)||/||(1 - (181.017 + 1729.685) / 2195.808)|
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))|
|=||(69.165 / (69.165 + 1729.685))||/||(80.012 / (80.012 + 1861.586))|
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)|
|=||(37.551 / 650.025)||/||(36.505 / 574.392)|
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)|
|=||((743.251 + 185.701) / 2255.326)||/||((743.486 + 107.94) / 2195.808)|
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|
|=||(71.153 - 5.992||-||162.186)||/||2255.326|
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 -2.76 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
Empire District Electric Co Annual Data
Empire District Electric Co Quarterly Data