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EarthLink Holdings Corp (NAS:ELNK)
Beneish M-Score
-3.71 (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 -3.71 suggests that the company is not a manipulator.

ELNK' s 10-Year Beneish M-Score Range
Min: -5.98   Max: 1.06
Current: -3.71

-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 -2.92.


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 * 0.9714+0.528 * 0.9614+0.404 * 0.8765+0.892 * 0.9516+0.115 * 0.9416
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.006+4.679 * -0.2253-0.327 * 1.0812
=-3.71

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $91 Mil.
Revenue was 282.447 + 284.472 + 297.745 + 297.358 = $1,162 Mil.
Gross Profit was 152.985 + 152.795 + 162.05 + 153.17 = $621 Mil.
Total Current Assets was $231 Mil.
Total Assets was $856 Mil.
Property, Plant and Equipment(Net PPE) was $392 Mil.
Depreciation, Depletion and Amortization(DDA) was $187 Mil.
Selling, General & Admin. Expense(SGA) was $408 Mil.
Total Current Liabilities was $191 Mil.
Long-Term Debt was $581 Mil.
Net Income was -10.483 + -22.492 + -1.952 + -21.838 = $-57 Mil.
Non Operating Income was -1.432 + -0.021 + -0.013 + 0.039 = $-1 Mil.
Cash Flow from Operations was 18.865 + 38.657 + 62.063 + 17.969 = $138 Mil.
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.



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)
=(90.942 / 1162.022) / (98.378 / 1221.138)
=0.07826186 / 0.08056256
=0.9714

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)
=(152.795 / 1221.138) / (152.985 / 1162.022)
=0.51377158 / 0.53441329
=0.9614

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 - (230.61 + 391.84) / 856.118) / (1 - (242.547 + 426.263) / 971.242)
=0.27293901 / 0.31138686
=0.8765

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
=1162.022 / 1221.138
=0.9516

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))
=(186.614 / (186.614 + 426.263)) / (187.281 / (187.281 + 391.84))
=0.3044885 / 0.32338838
=0.9416

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)
=(407.793 / 1162.022) / (425.976 / 1221.138)
=0.35093398 / 0.34883527
=1.006

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)
=((580.592 + 190.862) / 856.118) / ((606.358 + 203.136) / 971.242)
=0.90110709 / 0.83346272
=1.0812

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
=(-56.765 - -1.427 - 137.554) / 856.118
=-0.2253

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 -3.71 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.24571.41670.86940.93770.8883.40660.90240.96720.96190.9686
GMI 0.96041.06351.0481.02190.98321.01611.13121.04651.02020.9799
AQI 1.2551.38651.08440.63460.81121.63811.30470.99530.62680.8659
SGI 0.93331.00850.93460.78580.75740.85972.1121.0160.92920.9486
DEPI 1.29051.20960.66650.98411.24.65350.30360.95751.03230.9328
SGAI 1.01371.04940.88090.6530.8920.9341.07841.03931.06861.0367
LVGI 0.9231.78851.20380.66690.74271.62481.07971.00161.5261.1031
TATA -0.0443-0.0255-0.1457-0.06470.0743-0.0485-0.0662-0.114-0.6579-0.2337
M-score -2.38-2.26-3.37-3.00-2.41-0.12-1.81-3.02-5.98-3.76

EarthLink Holdings Corp Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 0.96481.09061.03890.96560.96430.96041.02221.04220.96860.9714
GMI 1.04761.04411.02021.01131.01911.01331.01551.00920.97990.9614
AQI 0.99530.85760.89180.95210.62680.73250.6920.62130.86590.8765
SGI 1.01850.92610.93030.9320.92690.93160.93440.94220.94860.9516
DEPI 0.95751.08651.10731.12441.03230.97240.93770.93570.93280.9416
SGAI 1.04191.0421.06111.06531.06591.0691.06351.04411.03671.006
LVGI 1.00161.17031.16121.16191.5261.33541.38631.36991.10311.0812
TATA -0.114-0.2878-0.3002-0.275-0.6579-0.4552-0.4896-0.4964-0.2339-0.2253
M-score -3.02-3.90-3.99-3.92-5.98-4.93-5.07-5.10-3.76-3.71
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