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Edgewater Technology Inc (NAS:EDGW)
Beneish M-Score
-2.42 (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 -2.42 suggests that the company is not a manipulator.

EDGW' s 10-Year Beneish M-Score Range
Min: -6.8   Max: 3199.47
Current: -2.42

-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 -2.29.


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 * 1.1388+0.528 * 0.991+0.404 * 0.8421+0.892 * 1.0911+0.115 * 0.9871
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9565+4.679 * -0.02-0.327 * 0.9903
=-2.42

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $24.7 Mil.
Revenue was 27.424 + 28.729 + 29.222 + 27.614 = $113.0 Mil.
Gross Profit was 9.957 + 10.416 + 10.886 + 10.107 = $41.4 Mil.
Total Current Assets was $53.7 Mil.
Total Assets was $93.4 Mil.
Property, Plant and Equipment(Net PPE) was $1.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.1 Mil.
Selling, General & Admin. Expense(SGA) was $33.0 Mil.
Total Current Liabilities was $18.0 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 0.656 + 0.976 + 1.721 + 0.711 = $4.1 Mil.
Non Operating Income was 0.019 + 0.146 + 0.045 + -0.046 = $0.2 Mil.
Cash Flow from Operations was 0.38 + 4.569 + 3.499 + -2.68 = $5.8 Mil.
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.



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)
=(24.654 / 112.989) / (19.842 / 103.556)
=0.21819823 / 0.19160647
=1.1388

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)
=(10.416 / 103.556) / (9.957 / 112.989)
=0.36281819 / 0.36610644
=0.991

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 - (53.671 + 1.029) / 93.413) / (1 - (42.274 + 1.437) / 86.067)
=0.4144284 / 0.49212823
=0.8421

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
=112.989 / 103.556
=1.0911

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))
=(1.552 / (1.552 + 1.437)) / (1.142 / (1.142 + 1.029))
=0.5192372 / 0.52602487
=0.9871

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)
=(33.016 / 112.989) / (31.636 / 103.556)
=0.29220544 / 0.30549654
=0.9565

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 + 17.973) / 93.413) / ((0 + 16.721) / 86.067)
=0.19240363 / 0.19427888
=0.9903

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
=(4.064 - 0.164 - 5.768) / 93.413
=-0.02

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 -2.42 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.09790.79241.27290.68712.27870.60991.03330.79651.05741.1388
GMI 0.91431.02350.9941.05091.21460.88730.9591.08020.96390.991
AQI 0.94311.09121.27550.60951.34320.63530.87920.92831.88930.8421
SGI 1.70311.39321.13991.07670.67921.76791.1570.98481.02651.0911
DEPI 0.89051.63690.88290.69011.07730.76231.08651.08360.96490.9871
SGAI 0.91840.8460.99971.01131.16690.92970.98640.9280.97640.9565
LVGI 1.23031.27451.0781.28611.85331.36630.99581.00570.56390.9903
TATA -0.0082-0.0662-0.0122-0.8163-0.0487-0.4831-0.1048-0.14130.3472-0.02
M-score -1.94-2.57-2.09-6.78-1.86-4.76-2.86-3.31-0.30-2.42

Edgewater Technology Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.08590.79650.85070.89530.85561.05741.14560.91831.13931.1388
GMI 1.0631.08021.08661.041.02110.96390.90770.9090.9310.991
AQI 0.91380.92830.96490.99670.981.88931.74631.73971.67250.8421
SGI 1.03480.98480.95150.96020.98041.02651.0871.09251.11211.0911
DEPI 1.09041.08361.06611.00410.98420.96490.94440.99560.990.9871
SGAI 1.0590.9280.93620.93850.89940.97640.96560.95620.95890.9565
LVGI 1.02851.00571.04920.86540.85020.56390.55870.53380.65830.9903
TATA -0.102-0.1413-0.1455-0.0766-0.06230.35120.37350.30590.2983-0.02
M-score -2.86-3.31-3.31-2.90-2.85-0.28-0.12-0.63-0.50-2.42
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