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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 * 1.1847||+||0.528 * 1.0258||+||0.404 * 0.5479||+||0.892 * 1.396||+||0.115 * 0.9178|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9416||+||4.679 * -0.0671||-||0.327 * 0.559|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $47.8 Mil.|
Revenue was 100.381 + 90.098 + 73.625 + 64.867 = $329.0 Mil.
Gross Profit was 68.163 + 61.645 + 46.994 + 41.312 = $218.1 Mil.
Total Current Assets was $447.3 Mil.
Total Assets was $705.8 Mil.
Property, Plant and Equipment(Net PPE) was $112.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $23.9 Mil.
Selling, General & Admin. Expense(SGA) was $118.0 Mil.
Total Current Liabilities was $57.0 Mil.
Long-Term Debt was $0.1 Mil.
Net Income was 13.78 + 10.588 + 2.506 + 4.822 = $31.7 Mil.
Non Operating Income was 0.204 + 0.162 + 0.199 + 0.18 = $0.7 Mil.
Cash Flow from Operations was 33.664 + 32.032 + -10.06 + 22.694 = $78.3 Mil.
|Accounts Receivable was $28.9 Mil.
Revenue was 68.939 + 65.942 + 54.189 + 46.577 = $235.6 Mil.
Gross Profit was 46.498 + 45.08 + 36.839 + 31.857 = $160.3 Mil.
Total Current Assets was $155.7 Mil.
Total Assets was $366.3 Mil.
Property, Plant and Equipment(Net PPE) was $72.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $13.9 Mil.
Selling, General & Admin. Expense(SGA) was $89.8 Mil.
Total Current Liabilities was $51.7 Mil.
Long-Term Debt was $1.3 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)|
|=||(47.835 / 328.971)||/||(28.924 / 235.647)|
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)|
|=||(160.274 / 235.647)||/||(218.114 / 328.971)|
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 - (447.316 + 112.621) / 705.829)||/||(1 - (155.693 + 72.44) / 366.347)|
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))|
|=||(13.889 / (13.889 + 72.44))||/||(23.938 / (23.938 + 112.621))|
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)|
|=||(117.996 / 328.971)||/||(89.769 / 235.647)|
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)|
|=||((0.117 + 56.997) / 705.829)||/||((1.303 + 51.728) / 366.347)|
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|
|=||(31.696 - 0.745||-||78.33)||/||705.829|
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 -2.30 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