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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.
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.
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|
|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
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)|
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)|
|=||(10.734 / 99.076)||/||(10.107 / 107.694)|
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 - (43.143 + 1.328) / 86.336)||/||(1 - (33.497 + 1.899) / 49.003)|
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))|
|=||(1.875 / (1.875 + 1.899))||/||(1.474 / (1.474 + 1.328))|
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)|
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)|
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|
|=||(36.308 - 0.058||-||4.253)||/||86.336|
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.
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