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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 7 years, the highest Beneish M-Score of Ellie Mae Inc was -2.05. The lowest was -2.64. And the median was -2.37.
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 * 1.3496||+||0.528 * 1.0443||+||0.404 * 0.998||+||0.892 * 1.2573||+||0.115 * 1.4605|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0045||+||4.679 * -0.0892||-||0.327 * 1.2909|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $20.4 Mil.|
Revenue was 46.577 + 42.798 + 39.984 + 32.178 = $161.5 Mil.
Gross Profit was 31.739 + 31.129 + 29.408 + 22.978 = $115.3 Mil.
Total Current Assets was $112.5 Mil.
Total Assets was $290.1 Mil.
Property, Plant and Equipment(Net PPE) was $28.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $8.4 Mil.
Selling, General & Admin. Expense(SGA) was $65.9 Mil.
Total Current Liabilities was $33.8 Mil.
Long-Term Debt was $0.4 Mil.
Net Income was 5.63 + 4.055 + 4.356 + 0.782 = $14.8 Mil.
Non Operating Income was 0.008 + 0 + 0.109 + 0.001 = $0.1 Mil.
Cash Flow from Operations was 15.818 + 10.977 + 11.68 + 2.123 = $40.6 Mil.
|Accounts Receivable was $12.0 Mil.
Revenue was 30.35 + 33.006 + 34.27 + 30.855 = $128.5 Mil.
Gross Profit was 22.152 + 24.674 + 25.663 + 23.244 = $95.7 Mil.
Total Current Assets was $98.3 Mil.
Total Assets was $228.6 Mil.
Property, Plant and Equipment(Net PPE) was $12.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $6.3 Mil.
Selling, General & Admin. Expense(SGA) was $52.2 Mil.
Total Current Liabilities was $20.7 Mil.
Long-Term Debt was $0.2 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)|
|=||(20.403 / 161.537)||/||(12.024 / 128.481)|
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)|
|=||(31.129 / 128.481)||/||(31.739 / 161.537)|
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 - (112.532 + 28.694) / 290.12)||/||(1 - (98.284 + 12.751) / 228.572)|
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))|
|=||(6.287 / (6.287 + 12.751))||/||(8.384 / (8.384 + 28.694))|
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)|
|=||(65.905 / 161.537)||/||(52.184 / 128.481)|
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)|
|=||((0.443 + 33.799) / 290.12)||/||((0.175 + 20.724) / 228.572)|
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|
|=||(14.823 - 0.118||-||40.598)||/||290.12|
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 -2.37 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