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EarthLink Holdings Corp (NAS:ELNK)
Beneish M-Score
-4.93 (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 -4.93 suggests that the company is not a manipulator.

ELNK' s 10-Year Beneish M-Score Range
Min: -5.98   Max: 1.06
Current: -4.93

-5.98
1.06

During the past 13 years, the highest Beneish M-Score of EarthLink Holdings Corp was 1.06. The lowest was -5.98. And the median was -2.85.


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 * 0.9604+0.528 * 1.0133+0.404 * 0.7325+0.892 * 0.9316+0.115 * 0.9724
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.069+4.679 * -0.4551-0.327 * 1.3354
=-4.93

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $98 Mil.
Revenue was 297.32 + 301.839 + 308.578 + 313.401 = $1,221 Mil.
Gross Profit was 151.444 + 151.661 + 163.818 + 160.463 = $627 Mil.
Total Current Assets was $243 Mil.
Total Assets was $971 Mil.
Property, Plant and Equipment(Net PPE) was $426 Mil.
Depreciation, Depletion and Amortization(DDA) was $187 Mil.
Selling, General & Admin. Expense(SGA) was $426 Mil.
Total Current Liabilities was $203 Mil.
Long-Term Debt was $606 Mil.
Net Income was -26.47 + -279.873 + -11.338 + -11.201 = $-329 Mil.
Non Operating Income was -0.01 + -0.17 + -0.2 + -0.118 = $-0 Mil.
Cash Flow from Operations was 21.306 + 40.726 + 39.89 + 11.696 = $114 Mil.
Accounts Receivable was $110 Mil.
Revenue was 316.788 + 328.726 + 330.839 + 334.479 = $1,311 Mil.
Gross Profit was 163.922 + 174.054 + 175.497 + 168.925 = $682 Mil.
Total Current Assets was $352 Mil.
Total Assets was $1,362 Mil.
Property, Plant and Equipment(Net PPE) was $431 Mil.
Depreciation, Depletion and Amortization(DDA) was $181 Mil.
Selling, General & Admin. Expense(SGA) was $428 Mil.
Total Current Liabilities was $236 Mil.
Long-Term Debt was $614 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)
=(98.378 / 1221.138) / (109.953 / 1310.832)
=0.08056256 / 0.08388031
=0.9604

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)
=(151.661 / 1310.832) / (151.444 / 1221.138)
=0.52058387 / 0.51377158
=1.0133

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 - (242.547 + 426.263) / 971.242) / (1 - (351.926 + 430.928) / 1361.753)
=0.31138686 / 0.42511307
=0.7325

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
=1221.138 / 1310.832
=0.9316

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))
=(181.266 / (181.266 + 430.928)) / (186.614 / (186.614 + 426.263))
=0.29609242 / 0.3044885
=0.9724

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)
=(425.976 / 1221.138) / (427.748 / 1310.832)
=0.34883527 / 0.32631794
=1.069

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)
=((606.358 + 203.136) / 971.242) / ((613.666 + 236.263) / 1361.753)
=0.83346272 / 0.62414329
=1.3354

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
=(-328.882 - -0.498 - 113.618) / 971.242
=-0.4551

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 -4.93 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 0.8761.25621.40490.86940.93770.8883.40660.90240.9672
GMI 0.90270.96041.06351.0481.02190.98321.01611.13121.0465
AQI 0.93551.2551.38651.08440.63460.81121.63811.30470.9953
SGI 0.98590.93331.00850.93460.78580.75740.85972.1121.016
DEPI 1.18971.29051.20960.66650.98411.24.65350.30360.9575
SGAI 0.97641.01371.04940.88090.6530.8920.9341.07841.0393
LVGI 0.9480.9231.78851.20380.66690.74271.62481.07971.0016
TATA -0.094-0.0443-0.0255-0.1457-0.06470.0743-0.0485-0.0662-0.114
M-score -3.08-2.37-2.27-3.37-3.00-2.41-0.12-1.81-3.02

EarthLink Holdings Corp Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.90240.90770.71580.95620.96481.09061.03890.96560.96430.9604
GMI 1.13121.11351.0841.06561.04761.04411.02021.01131.01911.0133
AQI 1.30471.27871.11171.10230.99530.85760.89180.95210.62680.7325
SGI 2.1121.99931.50941.20281.01850.92610.93030.9320.92690.9316
DEPI 0.30360.44090.53690.73880.95751.08651.10731.12441.03230.9724
SGAI 1.07841.06691.02761.03761.04191.0421.06111.06531.06591.069
LVGI 1.07971.07220.90660.91761.00161.17031.16121.16191.5261.3354
TATA -0.0662-0.0786-0.1033-0.116-0.114-0.2878-0.3002-0.275-0.6579-0.4551
M-score -1.81-1.97-2.71-2.82-3.02-3.90-3.99-3.92-5.98-4.93
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