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Edgewater Technology, Inc. (NAS:EDGW)
Beneish M-Score
-0.29 (As of Today)

Warning Sign:

Beneish M-Score -0.29 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.

Edgewater Technology, Inc. has a M-score of -0.29 signals that the company is a manipulator.

EDGW' s 10-Year Beneish M-Score Range
Min: -6.8   Max: 3199.47
Current: -0.29

-6.8
3199.47

During the past 13 years, the highest Beneish M-Score of Edgewater Technology, Inc. was 3199.47. The lowest was -6.80. And the median was -2.16.


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 * 1.0574+0.528 * 0.9639+0.404 * 1.8893+0.892 * 1.0265+0.115 * 0.9649
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9764+4.679 * 0.3494-0.327 * 0.5639
=-0.29

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $19.8 Mil.
Revenue was 26.781 + 25.399 + 27.9 + 23.476 = $103.6 Mil.
Gross Profit was 10.734 + 9.657 + 10.041 + 7.14 = $37.6 Mil.
Total Current Assets was $42.3 Mil.
Total Assets was $86.1 Mil.
Property, Plant and Equipment(Net PPE) was $1.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.6 Mil.
Selling, General & Admin. Expense(SGA) was $31.6 Mil.
Total Current Liabilities was $16.7 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 32.411 + 1.772 + 1.414 + -0.889 = $34.7 Mil.
Non Operating Income was -0.002 + 0.081 + -0.069 + -0.104 = $-0.1 Mil.
Cash Flow from Operations was 2.414 + 5.87 + -1.351 + -2.2 = $4.7 Mil.
Accounts Receivable was $18.3 Mil.
Revenue was 24.248 + 24.165 + 27.187 + 25.281 = $100.9 Mil.
Gross Profit was 8.442 + 8.812 + 9.46 + 8.565 = $35.3 Mil.
Total Current Assets was $36.4 Mil.
Total Assets was $51.8 Mil.
Property, Plant and Equipment(Net PPE) was $1.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.0 Mil.
Selling, General & Admin. Expense(SGA) was $31.6 Mil.
Total Current Liabilities was $17.8 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)
=(19.842 / 103.556) / (18.281 / 100.881)
=0.19160647 / 0.18121351
=1.0574

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)
=(9.657 / 100.881) / (10.734 / 103.556)
=0.34970906 / 0.36281819
=0.9639

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 - (42.274 + 1.437) / 86.067) / (1 - (36.35 + 1.949) / 51.789)
=0.49212823 / 0.26048002
=1.8893

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
=103.556 / 100.881
=1.0265

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))
=(1.957 / (1.957 + 1.949)) / (1.552 / (1.552 + 1.437))
=0.50102407 / 0.5192372
=0.9649

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)
=(31.636 / 103.556) / (31.563 / 100.881)
=0.30549654 / 0.31287358
=0.9764

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 + 16.721) / 86.067) / ((0 + 17.842) / 51.789)
=0.19427888 / 0.34451331
=0.5639

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
=(34.708 - -0.094 - 4.733) / 86.067
=0.3494

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 -0.29 signals that the company is likely to 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.33640.86370.79241.27290.68712.27870.60991.03330.79651.0574
GMI 1.20430.91431.02350.9941.05091.21460.88730.9591.08020.9639
AQI 1.16220.94311.09121.27550.60951.34320.63530.87920.92831.8893
SGI 1.01071.70311.39321.13991.07670.67921.76791.1570.98481.0265
DEPI 1.0140.89051.63690.88290.69011.07730.76231.08651.08360.9649
SGAI 0.99670.91840.8460.99971.01131.16690.92970.98640.9280.9764
LVGI 0.95761.23031.27451.0781.28611.85331.36630.99581.00570.5639
TATA -0.0076-0.0082-0.0662-0.0122-0.8163-0.0487-0.4831-0.1048-0.14130.3494
M-score -2.01-2.16-2.57-2.09-6.78-1.86-4.76-2.86-3.31-0.29

Edgewater Technology, Inc. Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 0.84481.03331.01571.12981.08590.79650.85070.89530.85561.0574
GMI 0.94080.9590.99571.05191.0631.08021.08661.041.02110.9639
AQI 0.82870.87920.9030.92280.91380.92830.96490.99670.981.8893
SGI 1.30331.1571.13351.08351.03480.98480.95150.96020.98041.0265
DEPI 0.99371.08651.08151.07381.09041.08361.06611.00410.98420.9649
SGAI 0.90930.98640.99330.95861.0590.9280.93620.93850.89940.9764
LVGI 1.08780.99581.08371.1561.02851.00571.04920.86540.85020.5639
TATA -0.1059-0.1055-0.1162-0.0644-0.102-0.1413-0.1455-0.0766-0.06540.3494
M-score -2.96-2.86-2.95-2.63-2.86-3.31-3.31-2.90-2.87-0.29
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