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EarthLink Holdings Corp (NAS:ELNK)
Beneish M-Score
-5.98 (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 -5.98 suggests that the company is not a manipulator.

ELNK' s 10-Year Beneish M-Score Range
Min: -5.98   Max: -0.12
Current: -5.98

-5.98
-0.12

During the past 13 years, the highest Beneish M-Score of EarthLink Holdings Corp was -0.12. The lowest was -5.98. And the median was -2.86.


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 * 0.9618+0.528 * 1.0191+0.404 * 0.6268+0.892 * 0.9293+0.115 * 1.0323
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0669+4.679 * -0.6579-0.327 * 1.526
=-5.98

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $101 Mil.
Revenue was 301.839 + 308.578 + 313.401 + 320.016 = $1,244 Mil.
Gross Profit was 151.661 + 163.818 + 160.463 + 165.592 = $642 Mil.
Total Current Assets was $248 Mil.
Total Assets was $1,007 Mil.
Property, Plant and Equipment(Net PPE) was $438 Mil.
Depreciation, Depletion and Amortization(DDA) was $183 Mil.
Selling, General & Admin. Expense(SGA) was $428 Mil.
Total Current Liabilities was $208 Mil.
Long-Term Debt was $606 Mil.
Net Income was -279.873 + -11.338 + -11.201 + -236.415 = $-539 Mil.
Non Operating Income was -0.17 + -0.2 + -0.118 + 0.213 = $-0 Mil.
Cash Flow from Operations was 40.726 + 39.89 + 11.696 + 31.844 = $124 Mil.
Accounts Receivable was $113 Mil.
Revenue was 328.726 + 330.839 + 334.479 + 344.376 = $1,338 Mil.
Gross Profit was 174.054 + 175.497 + 168.925 + 185.039 = $704 Mil.
Total Current Assets was $367 Mil.
Total Assets was $1,599 Mil.
Property, Plant and Equipment(Net PPE) was $419 Mil.
Depreciation, Depletion and Amortization(DDA) was $183 Mil.
Selling, General & Admin. Expense(SGA) was $431 Mil.
Total Current Liabilities was $232 Mil.
Long-Term Debt was $615 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)
=(100.792 / 1243.834) / (112.765 / 1338.42)
=0.08103332 / 0.08425233
=0.9618

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)
=(163.818 / 1338.42) / (151.661 / 1243.834)
=0.52563097 / 0.5157714
=1.0191

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 - (247.852 + 438.321) / 1007.318) / (1 - (366.9 + 418.966) / 1599.41)
=0.31881193 / 0.50865257
=0.6268

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
=1243.834 / 1338.42
=0.9293

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))
=(183.165 / (183.165 + 418.966)) / (183.114 / (183.114 + 438.321))
=0.3041946 / 0.29466316
=1.0323

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)
=(427.561 / 1243.834) / (431.239 / 1338.42)
=0.34374442 / 0.32220006
=1.0669

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)
=((606.442 + 207.884) / 1007.318) / ((614.89 + 232.432) / 1599.41)
=0.80841006 / 0.5297716
=1.526

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
=(-538.827 - -0.275 - 124.156) / 1007.318
=-0.6579

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 -5.98 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.8761.25621.40490.86940.93770.8883.40660.90240.96720.9619
GMI 0.90270.96041.06351.0481.02190.98321.01611.13121.04651.0202
AQI 0.93551.2551.38651.08440.63460.81121.63811.30470.99530.6268
SGI 0.98590.93331.00850.93460.78580.75740.85972.1121.0160.9292
DEPI 1.18971.29051.20960.66650.98411.24.65350.30360.95751.0323
SGAI 0.97641.01371.04940.88090.6530.8920.9341.07841.03931.0686
LVGI 0.9480.9231.78851.20380.66690.74271.62481.07971.00161.526
TATA -0.094-0.0443-0.0255-0.1457-0.06470.0743-0.0485-0.0662-0.114-0.6579
M-score -3.08-2.37-2.27-3.37-3.00-2.41-0.12-1.81-3.02-5.98

EarthLink Holdings Corp Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 2.63450.90240.90770.71580.95620.96481.08791.03630.96310.9618
GMI 1.13431.13121.11351.0841.06561.04761.04411.02031.01141.0191
AQI 1.2621.30471.27871.11171.10230.99530.85760.89180.95210.6268
SGI 1.82372.1121.99931.50941.20281.01850.92840.93260.93440.9293
DEPI 1.56570.30360.44090.53690.73880.95751.08631.10731.12441.0323
SGAI 1.07081.07841.06691.02761.03761.04191.04311.06211.06621.0669
LVGI 2.05341.07971.07220.90660.91761.00161.17031.16121.16191.526
TATA -0.0555-0.0662-0.0786-0.1033-0.116-0.114-0.2878-0.3002-0.275-0.6579
M-score -0.62-1.81-1.97-2.71-2.82-3.02-3.90-4.00-3.92-5.98
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