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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.
During the past 8 years, the highest Beneish M-Score of Ellie Mae Inc was -1.75. The lowest was -3.03. And the median was -2.36.
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 Ellie Mae 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 * 1.0696||+||0.528 * 1.0475||+||0.404 * 0.8612||+||0.892 * 1.4201||+||0.115 * 0.9544|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9855||+||4.679 * -0.1173||-||0.327 * 0.9898|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $44.3 Mil.|
Revenue was 90.098 + 73.625 + 64.867 + 68.939 = $297.5 Mil.
Gross Profit was 61.645 + 46.994 + 41.312 + 46.498 = $196.4 Mil.
Total Current Assets was $147.0 Mil.
Total Assets was $397.1 Mil.
Property, Plant and Equipment(Net PPE) was $105.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $20.8 Mil.
Selling, General & Admin. Expense(SGA) was $111.7 Mil.
Total Current Liabilities was $55.7 Mil.
Long-Term Debt was $0.2 Mil.
Net Income was 10.588 + 2.506 + 4.822 + 6.222 = $24.1 Mil.
Non Operating Income was 0.162 + 0.199 + 0 + 0 = $0.4 Mil.
Cash Flow from Operations was 32.032 + -10.06 + 22.694 + 25.686 = $70.4 Mil.
|Accounts Receivable was $29.2 Mil.
Revenue was 65.942 + 54.189 + 46.577 + 42.798 = $209.5 Mil.
Gross Profit was 45.08 + 36.839 + 31.857 + 31.129 = $144.9 Mil.
Total Current Assets was $132.6 Mil.
Total Assets was $338.3 Mil.
Property, Plant and Equipment(Net PPE) was $63.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $11.7 Mil.
Selling, General & Admin. Expense(SGA) was $79.8 Mil.
Total Current Liabilities was $46.0 Mil.
Long-Term Debt was $2.1 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)|
|=||(44.306 / 297.529)||/||(29.168 / 209.506)|
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)|
|=||(144.905 / 209.506)||/||(196.449 / 297.529)|
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 - (147.036 + 105.787) / 397.071)||/||(1 - (132.635 + 62.962) / 338.314)|
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))|
|=||(11.727 / (11.727 + 62.962))||/||(20.829 / (20.829 + 105.787))|
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)|
|=||(111.722 / 297.529)||/||(79.83 / 209.506)|
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)|
|=||((0.151 + 55.735) / 397.071)||/||((2.146 + 45.959) / 338.314)|
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|
|=||(24.138 - 0.361||-||70.352)||/||397.071|
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.
Ellie Mae Inc has a M-score of -2.62 suggests that the company will not 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
Ellie Mae Inc Annual Data
Ellie Mae Inc Quarterly Data