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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.
Ellie Mae Inc has a M-score of -2.40 suggests that the company is not a manipulator.
During the past 6 years, the highest Beneish M-Score of Ellie Mae Inc was -2.03. The lowest was -2.64. And the median was -2.33.
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 * 1.3962||+||0.528 * 1.0414||+||0.404 * 0.9061||+||0.892 * 1.1348||+||0.115 * 1.3575|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.053||+||4.679 * -0.0846||-||0.327 * 1.0894|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $17.9 Mil.|
Revenue was 42.798 + 39.984 + 32.178 + 30.35 = $145.3 Mil.
Gross Profit was 31.129 + 29.408 + 22.978 + 22.152 = $105.7 Mil.
Total Current Assets was $109.5 Mil.
Total Assets was $264.3 Mil.
Property, Plant and Equipment(Net PPE) was $23.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $7.1 Mil.
Selling, General & Admin. Expense(SGA) was $61.0 Mil.
Total Current Liabilities was $22.2 Mil.
Long-Term Debt was $0.5 Mil.
Net Income was 4.055 + 4.356 + 0.782 + 1.618 = $10.8 Mil.
Non Operating Income was 0 + 0.109 + 0.001 + 0.005 = $0.1 Mil.
Cash Flow from Operations was 10.977 + 11.68 + 2.123 + 8.27 = $33.1 Mil.
|Accounts Receivable was $11.3 Mil.
Revenue was 33.006 + 34.27 + 30.855 + 29.914 = $128.0 Mil.
Gross Profit was 24.674 + 25.663 + 23.244 + 23.389 = $97.0 Mil.
Total Current Assets was $85.7 Mil.
Total Assets was $218.4 Mil.
Property, Plant and Equipment(Net PPE) was $12.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $5.9 Mil.
Selling, General & Admin. Expense(SGA) was $51.1 Mil.
Total Current Liabilities was $17.2 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)|
|=||(17.868 / 145.31)||/||(11.277 / 128.045)|
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)|
|=||(29.408 / 128.045)||/||(31.129 / 145.31)|
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 - (109.501 + 23.122) / 264.326)||/||(1 - (85.695 + 12.621) / 218.434)|
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))|
|=||(5.892 / (5.892 + 12.621))||/||(7.081 / (7.081 + 23.122))|
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)|
|=||(61.01 / 145.31)||/||(51.055 / 128.045)|
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)|
|=||((0.521 + 22.198) / 264.326)||/||((0 + 17.234) / 218.434)|
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|
|=||(10.811 - 0.115||-||33.05)||/||264.326|
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 -2.40 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