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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 Edgewater Technology Inc was 7757.99. The lowest was -9.92. And the median was -2.46.
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 Edgewater Technology 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 * 1.0395||+||0.528 * 0.9932||+||0.404 * 1.2475||+||0.892 * 1.09||+||0.115 * 0.6696|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.972||+||4.679 * -0.0273||-||0.327 * 1.299|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $28.9 Mil.|
Revenue was 31.898 + 28.415 + 31.184 + 30.527 = $122.0 Mil.
Gross Profit was 10.75 + 9.776 + 11.756 + 10.413 = $42.7 Mil.
Total Current Assets was $39.2 Mil.
Total Assets was $105.9 Mil.
Property, Plant and Equipment(Net PPE) was $0.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.5 Mil.
Selling, General & Admin. Expense(SGA) was $36.3 Mil.
Total Current Liabilities was $22.7 Mil.
Long-Term Debt was $5.0 Mil.
Net Income was -0.763 + -4.641 + 1.027 + 0.494 = $-3.9 Mil.
Non Operating Income was -0.625 + -0.739 + -0.65 + -0.504 = $-2.5 Mil.
Cash Flow from Operations was -5.153 + 2.411 + 3.324 + 0.945 = $1.5 Mil.
|Accounts Receivable was $25.5 Mil.
Revenue was 26.578 + 27.424 + 28.729 + 29.222 = $112.0 Mil.
Gross Profit was 7.645 + 9.957 + 10.416 + 10.886 = $38.9 Mil.
Total Current Assets was $47.3 Mil.
Total Assets was $96.5 Mil.
Property, Plant and Equipment(Net PPE) was $1.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.1 Mil.
Selling, General & Admin. Expense(SGA) was $34.2 Mil.
Total Current Liabilities was $19.4 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)|
|=||(28.926 / 122.024)||/||(25.529 / 111.953)|
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)|
|=||(9.776 / 111.953)||/||(10.75 / 122.024)|
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 - (39.201 + 0.721) / 105.887)||/||(1 - (47.264 + 1.038) / 96.487)|
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))|
|=||(1.119 / (1.119 + 1.038))||/||(2.48 / (2.48 + 0.721))|
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)|
|=||(36.27 / 122.024)||/||(34.235 / 111.953)|
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)|
|=||((5 + 22.68) / 105.887)||/||((0 + 19.417) / 96.487)|
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|
|=||(-3.883 - -2.518||-||1.527)||/||105.887|
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.
Edgewater Technology Inc has a M-score of -2.53 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
Edgewater Technology Inc Annual Data
Edgewater Technology Inc Quarterly Data