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Edgewater Technology Inc (NAS:EDGW)
Beneish M-Score
-2.75 (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.

Edgewater Technology Inc has a M-score of -2.75 suggests that the company is not a manipulator.

EDGW' s Beneish M-Score Range Over the Past 10 Years
Min: -9.92   Max: 7757.99
Current: -2.75

-9.92
7757.99

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 -2.49.


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 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 * 0.9882+0.528 * 0.9445+0.404 * 1.2399+0.892 * 1.1083+0.115 * 0.6744
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9795+4.679 * -0.0592-0.327 * 1.3478
=-2.75

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $29.1 Mil.
Revenue was 34.024 + 31.898 + 28.415 + 31.184 = $125.5 Mil.
Gross Profit was 12.814 + 10.75 + 9.776 + 11.756 = $45.1 Mil.
Total Current Assets was $41.5 Mil.
Total Assets was $106.3 Mil.
Property, Plant and Equipment(Net PPE) was $0.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.2 Mil.
Selling, General & Admin. Expense(SGA) was $37.1 Mil.
Total Current Liabilities was $23.7 Mil.
Long-Term Debt was $5.0 Mil.
Net Income was 1.313 + -0.763 + -4.641 + 1.027 = $-3.1 Mil.
Non Operating Income was -0.568 + -0.625 + -0.739 + -0.65 = $-2.6 Mil.
Cash Flow from Operations was 5.231 + -5.153 + 2.411 + 3.324 = $5.8 Mil.
Accounts Receivable was $26.6 Mil.
Revenue was 30.527 + 26.578 + 27.424 + 28.729 = $113.3 Mil.
Gross Profit was 10.413 + 7.645 + 9.957 + 10.416 = $38.4 Mil.
Total Current Assets was $49.4 Mil.
Total Assets was $98.1 Mil.
Property, Plant and Equipment(Net PPE) was $1.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.2 Mil.
Selling, General & Admin. Expense(SGA) was $34.2 Mil.
Total Current Liabilities was $19.6 Mil.
Long-Term Debt was $0.0 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)
=(29.093 / 125.521) / (26.565 / 113.258)
=0.23177795 / 0.23455297
=0.9882

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)
=(38.431 / 113.258) / (45.096 / 125.521)
=0.33932261 / 0.35927056
=0.9445

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 - (41.453 + 0.755) / 106.344) / (1 - (49.369 + 1.011) / 98.091)
=0.60309938 / 0.48639529
=1.2399

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
=125.521 / 113.258
=1.1083

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))
=(1.208 / (1.208 + 1.011)) / (3.162 / (3.162 + 0.755))
=0.54438936 / 0.80725045
=0.6744

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)
=(37.09 / 125.521) / (34.167 / 113.258)
=0.2954884 / 0.30167405
=0.9795

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 + 23.672) / 106.344) / ((0 + 19.622) / 98.091)
=0.26961559 / 0.20003874
=1.3478

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
=(-3.064 - -2.582 - 5.813) / 106.344
=-0.0592

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 -2.75 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.

Edgewater Technology Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.79241.27290.68712.27870.60991.03330.79651.05741.13881.0899
GMI 1.02350.9941.05091.21460.88730.9591.08020.96390.9911.0792
AQI 1.09121.27550.60951.34320.63530.87920.92831.88930.86811.4416
SGI 1.39321.13991.07670.67921.76791.1570.98481.02651.09111.0329
DEPI 1.63690.88290.69011.07730.76231.08651.08360.96490.98710.7798
SGAI 0.8460.99971.01131.16690.92970.98640.9280.97641.00080.9695
LVGI 1.27451.0781.28611.85331.36630.99581.00570.56390.99031.4791
TATA -0.05280.0011-0.8163-0.0487-0.4831-0.1048-0.14150.3494-0.0165-0.0496
M-score -2.51-2.03-6.78-1.86-4.76-2.86-3.31-0.29-2.40-2.56

Edgewater Technology Inc Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 1.14560.91831.13931.13881.07621.06891.11771.08991.03950.9882
GMI 0.90770.9090.9310.9911.08321.11871.09141.07920.99320.9445
AQI 1.74631.73971.67250.86811.02991.08281.15841.44161.24751.2399
SGI 1.0871.09251.11211.09111.03951.03891.031.03291.091.1083
DEPI 0.94440.99560.990.98711.0140.95250.87640.77980.66960.6744
SGAI 0.96561.0021.00371.00091.00750.97860.97860.96930.9720.9795
LVGI 0.55870.53380.65830.99031.09491.07331.0441.47911.2991.3478
TATA 0.37170.30420.3015-0.0163-0.0245-0.00490.0128-0.0494-0.0273-0.0592
M-score -0.13-0.65-0.50-2.40-2.46-2.33-2.20-2.56-2.53-2.75
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