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Edgewater Technology Inc (NAS:EDGW)
Beneish M-Score
-0.64 (As of Today)

Warning Sign:

Beneish M-Score -0.64 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 -0.64 signals that the company is a manipulator.

EDGW' s 10-Year Beneish M-Score Range
Min: -7.4   Max: 3199.47
Current: -0.64

-7.4
3199.47

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 -2.49.


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 * 0.9183+0.528 * 0.909+0.404 * 1.7397+0.892 * 1.0925+0.115 * 0.9956
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9562+4.679 * 0.3042-0.327 * 0.5338
=-0.64

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $23.9 Mil.
Revenue was 29.222 + 27.614 + 26.781 + 25.399 = $109.0 Mil.
Gross Profit was 10.886 + 10.107 + 10.734 + 9.657 = $41.4 Mil.
Total Current Assets was $48.4 Mil.
Total Assets was $90.2 Mil.
Property, Plant and Equipment(Net PPE) was $1.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.3 Mil.
Selling, General & Admin. Expense(SGA) was $32.1 Mil.
Total Current Liabilities was $16.8 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 1.721 + 0.711 + 32.411 + 1.772 = $36.6 Mil.
Non Operating Income was 0.045 + -0.046 + -0.002 + 0.081 = $0.1 Mil.
Cash Flow from Operations was 3.499 + -2.68 + 2.414 + 5.87 = $9.1 Mil.
Accounts Receivable was $23.8 Mil.
Revenue was 27.9 + 23.476 + 24.248 + 24.165 = $99.8 Mil.
Gross Profit was 10.041 + 7.14 + 8.442 + 8.812 = $34.4 Mil.
Total Current Assets was $36.9 Mil.
Total Assets was $52.1 Mil.
Property, Plant and Equipment(Net PPE) was $1.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.8 Mil.
Selling, General & Admin. Expense(SGA) was $30.7 Mil.
Total Current Liabilities was $18.2 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)
=(23.922 / 109.016) / (23.846 / 99.789)
=0.21943568 / 0.23896421
=0.9183

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)
=(10.107 / 99.789) / (10.886 / 109.016)
=0.34507811 / 0.379614
=0.909

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 - (48.44 + 1.235) / 90.19) / (1 - (36.918 + 1.714) / 52.08)
=0.44921832 / 0.25821813
=1.7397

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
=109.016 / 99.789
=1.0925

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))
=(1.829 / (1.829 + 1.714)) / (1.33 / (1.33 + 1.235))
=0.51622918 / 0.51851852
=0.9956

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)
=(32.073 / 109.016) / (30.702 / 99.789)
=0.29420452 / 0.30766918
=0.9562

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 + 16.809) / 90.19) / ((0 + 18.183) / 52.08)
=0.18637321 / 0.34913594
=0.5338

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
=(36.615 - 0.078 - 9.103) / 90.19
=0.3042

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 -0.64 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

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1.01571.12981.08590.79650.85070.89530.85561.05741.14560.9183
GMI 0.99571.05191.0631.08021.08661.041.02110.96390.90770.909
AQI 0.9030.92280.91380.92830.96490.99670.981.88931.74631.7397
SGI 1.13351.08351.03480.98480.95150.96020.98041.02651.0871.0925
DEPI 1.08151.07381.09041.08361.06611.00410.98420.96490.94440.9956
SGAI 0.99330.95861.0590.9280.93620.93850.89940.97640.96560.9562
LVGI 1.08371.1561.02851.00571.04920.86540.85020.56390.55870.5338
TATA -0.1162-0.0644-0.102-0.1413-0.1455-0.0766-0.06540.34940.37170.3042
M-score -2.95-2.63-2.86-3.31-3.31-2.90-2.87-0.29-0.13-0.64
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