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Edgewater Technology Inc (NAS:EDGW)
Beneish M-Score
-0.14 (As of Today)

Warning Sign:

Beneish M-Score -0.14 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 -0.14 signals that the company is a manipulator.

EDGW' s 10-Year Beneish M-Score Range
Min: -7.4   Max: 3199.47
Current: -0.14

-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 -2.41.


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 * 1.1456+0.528 * 0.9077+0.404 * 1.7463+0.892 * 1.087+0.115 * 0.9444
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9837+4.679 * 0.3706-0.327 * 0.5587
=-0.14

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $22.8 Mil.
Revenue was 27.614 + 26.781 + 25.399 + 27.9 = $107.7 Mil.
Gross Profit was 10.107 + 10.734 + 9.657 + 10.041 = $40.5 Mil.
Total Current Assets was $43.1 Mil.
Total Assets was $86.3 Mil.
Property, Plant and Equipment(Net PPE) was $1.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.5 Mil.
Selling, General & Admin. Expense(SGA) was $32.7 Mil.
Total Current Liabilities was $15.9 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 0.711 + 32.411 + 1.772 + 1.414 = $36.3 Mil.
Non Operating Income was 0.046 + 0 + 0.081 + -0.069 = $0.1 Mil.
Cash Flow from Operations was -2.68 + 2.414 + 5.87 + -1.351 = $4.3 Mil.
Accounts Receivable was $18.3 Mil.
Revenue was 23.476 + 24.248 + 24.165 + 27.187 = $99.1 Mil.
Gross Profit was 7.14 + 8.442 + 8.812 + 9.46 = $33.9 Mil.
Total Current Assets was $33.5 Mil.
Total Assets was $49.0 Mil.
Property, Plant and Equipment(Net PPE) was $1.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.9 Mil.
Selling, General & Admin. Expense(SGA) was $30.6 Mil.
Total Current Liabilities was $16.1 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)
=(22.82 / 107.694) / (18.326 / 99.076)
=0.21189667 / 0.18496911
=1.1456

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)
=(10.734 / 99.076) / (10.107 / 107.694)
=0.34169728 / 0.37642766
=0.9077

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 - (43.143 + 1.328) / 86.336) / (1 - (33.497 + 1.899) / 49.003)
=0.4849078 / 0.27767688
=1.7463

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
=107.694 / 99.076
=1.087

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))
=(1.875 / (1.875 + 1.899)) / (1.474 / (1.474 + 1.328))
=0.49682035 / 0.52605282
=0.9444

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)
=(32.686 / 107.694) / (30.568 / 99.076)
=0.30350809 / 0.30853082
=0.9837

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 + 15.869) / 86.336) / ((0 + 16.12) / 49.003)
=0.18380513 / 0.32895945
=0.5587

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
=(36.308 - 0.058 - 4.253) / 86.336
=0.3706

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 -0.14 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 1.47681.09790.79241.27290.68712.27870.60991.03330.79651.0574
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 0.99670.91840.8460.99971.01131.16690.92970.98640.93480.9693
LVGI 0.95761.23031.27451.0781.28611.85331.36630.99581.00570.5639
TATA -0.0076-0.0082-0.0662-0.0122-0.8163-0.0487-0.4831-0.1048-0.1440.3472
M-score -1.88-1.94-2.57-2.09-6.78-1.86-4.76-2.86-3.32-0.29

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 0.99330.94251.04160.91110.91890.95460.91440.99450.98370.99
LVGI 1.08371.1561.02851.00571.04920.86540.85020.56390.55870.5338
TATA -0.1162-0.0716-0.1094-0.1512-0.1559-0.0789-0.06770.34930.37060.3041
M-score -2.95-2.66-2.89-3.35-3.35-2.91-2.88-0.29-0.14-0.65
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