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Beneish M-Score -0.49 higher than -2.22, which implies that it might have manipulated its financial results.
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 3199.47. The lowest was -7.40. And the median was -2.34.
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 * 1.1393||+||0.528 * 0.931||+||0.404 * 1.6725||+||0.892 * 1.1121||+||0.115 * 0.99|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9589||+||4.679 * 0.2984||-||0.327 * 0.6583|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $24.1 Mil.|
Revenue was 28.729 + 29.222 + 27.614 + 26.781 = $112.3 Mil.
Gross Profit was 10.416 + 10.886 + 10.107 + 10.734 = $42.1 Mil.
Total Current Assets was $52.5 Mil.
Total Assets was $93.4 Mil.
Property, Plant and Equipment(Net PPE) was $1.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.2 Mil.
Selling, General & Admin. Expense(SGA) was $32.8 Mil.
Total Current Liabilities was $19.2 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 0.976 + 1.721 + 0.711 + 32.411 = $35.8 Mil.
Non Operating Income was 0.146 + 0.045 + -0.046 + -0.002 = $0.1 Mil.
Cash Flow from Operations was 4.569 + 3.499 + -2.68 + 2.414 = $7.8 Mil.
|Accounts Receivable was $19.0 Mil.
Revenue was 25.399 + 27.9 + 23.476 + 24.248 = $101.0 Mil.
Gross Profit was 9.657 + 10.041 + 7.14 + 8.442 = $35.3 Mil.
Total Current Assets was $37.6 Mil.
Total Assets was $52.7 Mil.
Property, Plant and Equipment(Net PPE) was $1.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.7 Mil.
Selling, General & Admin. Expense(SGA) was $30.8 Mil.
Total Current Liabilities was $16.4 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)|
|=||(24.075 / 112.346)||/||(19.001 / 101.023)|
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)|
|=||(10.886 / 101.023)||/||(10.416 / 112.346)|
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 - (52.488 + 1.142) / 93.426)||/||(1 - (37.638 + 1.613) / 52.664)|
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))|
|=||(1.703 / (1.703 + 1.613))||/||(1.231 / (1.231 + 1.142))|
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)|
|=||(32.836 / 112.346)||/||(30.793 / 101.023)|
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 + 19.186) / 93.426)||/||((0 + 16.429) / 52.664)|
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|
|=||(35.819 - 0.143||-||7.802)||/||93.426|
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 -0.50 signals that the company is likely to 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