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EarthLink Holdings Corp (NAS:ELNK)
Beneish M-Score
-4.02 (As of Today)

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.

EarthLink Holdings Corp has a M-score of -4.02 suggests that the company is not a manipulator.

ELNK' s Beneish M-Score Range Over the Past 10 Years
Min: -5.97   Max: 1.09
Current: -4.02

-5.97
1.09

During the past 13 years, the highest Beneish M-Score of EarthLink Holdings Corp was 1.09. The lowest was -5.97. And the median was -2.89.


Definition

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 EarthLink Holdings Corp 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 * 0.8654+0.528 * 0.968+0.404 * 0.8772+0.892 * 0.9323+0.115 * 0.9407
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9439+4.679 * -0.2721-0.327 * 1.0495
=-4.02

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $75 Mil.
Revenue was 260.237 + 270.904 + 283.664 + 282.447 = $1,097 Mil.
Gross Profit was 138.51 + 148.513 + 156.616 + 152.985 = $597 Mil.
Total Current Assets was $190 Mil.
Total Assets was $735 Mil.
Property, Plant and Equipment(Net PPE) was $373 Mil.
Depreciation, Depletion and Amortization(DDA) was $188 Mil.
Selling, General & Admin. Expense(SGA) was $369 Mil.
Total Current Liabilities was $180 Mil.
Long-Term Debt was $506 Mil.
Net Income was -12.282 + -10.523 + -9.922 + -10.483 = $-43 Mil.
Non Operating Income was -0.009 + -2.516 + -6.77 + -1.432 = $-11 Mil.
Cash Flow from Operations was 41.359 + 73.962 + 33.262 + 18.865 = $167 Mil.
Accounts Receivable was $93 Mil.
Revenue was 284.472 + 297.745 + 297.358 + 297.32 = $1,177 Mil.
Gross Profit was 152.795 + 162.05 + 153.17 + 151.444 = $619 Mil.
Total Current Assets was $254 Mil.
Total Assets was $899 Mil.
Property, Plant and Equipment(Net PPE) was $405 Mil.
Depreciation, Depletion and Amortization(DDA) was $187 Mil.
Selling, General & Admin. Expense(SGA) was $419 Mil.
Total Current Liabilities was $205 Mil.
Long-Term Debt was $595 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(74.724 / 1097.252) / (92.616 / 1176.895)
=0.06810104 / 0.07869521
=0.8654

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(148.513 / 1176.895) / (138.51 / 1097.252)
=0.52635027 / 0.54374383
=0.968

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (189.931 + 372.504) / 734.652) / (1 - (254.181 + 404.713) / 899.196)
=0.23441983 / 0.26724096
=0.8772

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=1097.252 / 1176.895
=0.9323

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))
=(186.872 / (186.872 + 404.713)) / (188.315 / (188.315 + 372.504))
=0.3158836 / 0.3357857
=0.9407

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)
=(368.763 / 1097.252) / (419.019 / 1176.895)
=0.33607868 / 0.35603771
=0.9439

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)
=((505.613 + 180.295) / 734.652) / ((595.319 + 204.581) / 899.196)
=0.93365022 / 0.88957246
=1.0495

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(-43.21 - -10.727 - 167.448) / 734.652
=-0.2721

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.

EarthLink Holdings Corp has a M-score of -4.02 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

EarthLink Holdings Corp Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.41650.86950.93770.8883.40660.90240.95720.97190.96860.8654
GMI 0.79351.04641.02191.00090.99811.13121.05011.01670.97990.968
AQI 1.38651.08440.63460.81121.63811.30470.99530.62680.83820.8772
SGI 1.00870.93450.78580.75740.85972.1121.02650.91970.94860.9323
DEPI 1.20960.66650.98411.24.65350.30360.9571.03290.93280.9407
SGAI 1.53640.88110.6530.92460.90111.07841.04951.05821.03670.9439
LVGI 1.78851.20380.66690.74271.62481.07971.00161.5261.10041.0495
TATA -0.0267-0.1457-0.05170.0743-0.0483-0.0662-0.114-0.6579-0.2366-0.2721
M-score -2.49-3.37-2.94-2.41-0.13-1.81-3.02-5.98-3.78-4.02

EarthLink Holdings Corp Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.95590.96430.96041.02221.04220.96860.97140.85520.83640.8654
GMI 1.01541.01911.01331.01551.00920.97990.96140.94630.95050.968
AQI 0.95210.62680.73250.6920.62130.83820.87650.87960.90430.8772
SGI 0.94140.92690.93160.93440.94220.94860.95160.95290.93910.9323
DEPI 1.12411.03230.97240.93770.93570.93280.94160.93980.92670.9407
SGAI 1.07651.06591.0691.06351.04411.03671.0060.98030.96340.9439
LVGI 1.16191.5261.33541.38631.36991.10041.08121.05621.06141.0495
TATA -0.275-0.6558-0.4531-0.4874-0.4943-0.2366-0.2252-0.2369-0.2699-0.2721
M-score -3.92-5.97-4.92-5.06-5.09-3.78-3.71-3.86-4.03-4.02
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