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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 -2.60. 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 * 1.3184||+||0.528 * 1.0455||+||0.404 * 0.9035||+||0.892 * 1.414||+||0.115 * 1.8387|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9408||+||4.679 * -0.1024||-||0.327 * 1.5588|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $25.6 Mil.|
Revenue was 54.189 + 46.577 + 42.798 + 39.984 = $183.5 Mil.
Gross Profit was 36.839 + 31.739 + 31.129 + 29.408 = $129.1 Mil.
Total Current Assets was $112.6 Mil.
Total Assets was $311.7 Mil.
Property, Plant and Equipment(Net PPE) was $50.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.7 Mil.
Selling, General & Admin. Expense(SGA) was $72.9 Mil.
Total Current Liabilities was $38.8 Mil.
Long-Term Debt was $2.2 Mil.
Net Income was 3.584 + 5.63 + 4.055 + 4.356 = $17.6 Mil.
Non Operating Income was 0 + 0.008 + 0 + 0.109 = $0.1 Mil.
Cash Flow from Operations was 10.946 + 15.818 + 10.977 + 11.68 = $49.4 Mil.
|Accounts Receivable was $13.7 Mil.
Revenue was 32.178 + 30.35 + 33.006 + 34.27 = $129.8 Mil.
Gross Profit was 22.86 + 22.27 + 24.674 + 25.663 = $95.5 Mil.
Total Current Assets was $95.8 Mil.
Total Assets was $235.1 Mil.
Property, Plant and Equipment(Net PPE) was $15.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $6.5 Mil.
Selling, General & Admin. Expense(SGA) was $54.8 Mil.
Total Current Liabilities was $19.3 Mil.
Long-Term Debt was $0.5 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)|
|=||(25.553 / 183.548)||/||(13.707 / 129.804)|
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)|
|=||(31.739 / 129.804)||/||(36.839 / 183.548)|
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 - (112.644 + 50.851) / 311.732)||/||(1 - (95.804 + 15.545) / 235.06)|
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))|
|=||(6.493 / (6.493 + 15.545))||/||(9.703 / (9.703 + 50.851))|
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)|
|=||(72.879 / 183.548)||/||(54.783 / 129.804)|
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)|
|=||((2.241 + 38.772) / 311.732)||/||((0.518 + 19.322) / 235.06)|
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|
|=||(17.625 - 0.117||-||49.421)||/||311.732|
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 -2.39 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