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EarthLink Holdings Corp (NAS:ELNK)
Beneish M-Score
-4.03 (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 -4.03 suggests that the company is not a manipulator.

ELNK' s Beneish M-Score Range Over the Past 10 Years
Min: -5.98   Max: 1.09
Current: -4.03

-5.98
1.09

During the past 13 years, the highest Beneish M-Score of EarthLink Holdings Corp was 1.09. 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 * 0.8364+0.528 * 0.9505+0.404 * 0.9043+0.892 * 0.9391+0.115 * 0.9267
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9634+4.679 * -0.2699-0.327 * 1.0614
=-4.03

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $83 Mil.
Revenue was 270.904 + 283.664 + 282.447 + 284.472 = $1,121 Mil.
Gross Profit was 148.513 + 156.616 + 152.985 + 152.795 = $611 Mil.
Total Current Assets was $199 Mil.
Total Assets was $768 Mil.
Property, Plant and Equipment(Net PPE) was $373 Mil.
Depreciation, Depletion and Amortization(DDA) was $189 Mil.
Selling, General & Admin. Expense(SGA) was $382 Mil.
Total Current Liabilities was $198 Mil.
Long-Term Debt was $507 Mil.
Net Income was -10.523 + -9.922 + -10.483 + -22.492 = $-53 Mil.
Non Operating Income was -2.516 + -6.77 + -1.432 + -0.146 = $-11 Mil.
Cash Flow from Operations was 73.962 + 33.262 + 18.865 + 38.657 = $165 Mil.
Accounts Receivable was $106 Mil.
Revenue was 297.745 + 297.358 + 297.32 + 301.839 = $1,194 Mil.
Gross Profit was 162.05 + 153.17 + 151.444 + 151.661 = $618 Mil.
Total Current Assets was $268 Mil.
Total Assets was $951 Mil.
Property, Plant and Equipment(Net PPE) was $415 Mil.
Depreciation, Depletion and Amortization(DDA) was $188 Mil.
Selling, General & Admin. Expense(SGA) was $423 Mil.
Total Current Liabilities was $216 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)
=(82.864 / 1121.487) / (105.501 / 1194.262)
=0.07388762 / 0.08833991
=0.8364

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)
=(156.616 / 1194.262) / (148.513 / 1121.487)
=0.51774652 / 0.54473124
=0.9505

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 - (199.006 + 372.948) / 768.026) / (1 - (267.814 + 414.802) / 951.115)
=0.25529344 / 0.2822992
=0.9043

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
=1121.487 / 1194.262
=0.9391

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))
=(187.986 / (187.986 + 414.802)) / (189.175 / (189.175 + 372.948))
=0.31186089 / 0.33653667
=0.9267

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)
=(382.371 / 1121.487) / (422.631 / 1194.262)
=0.34095001 / 0.35388466
=0.9634

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)
=((507.335 + 197.861) / 768.026) / ((606.382 + 216.417) / 951.115)
=0.91819287 / 0.86508887
=1.0614

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
=(-53.42 - -10.864 - 164.746) / 768.026
=-0.2699

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 -4.03 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

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 1.03890.96560.96430.96041.02221.04220.96860.97140.85520.8364
GMI 1.02021.01131.01911.01331.01551.00920.97990.96140.94630.9505
AQI 0.89180.95210.62680.73250.6920.62130.86590.87650.87960.9043
SGI 0.93030.9320.92690.93160.93440.94220.94860.95160.95290.9391
DEPI 1.10731.12441.03230.97240.93770.93570.93280.94160.93980.9267
SGAI 1.06111.06531.06591.0691.06351.04411.03671.0060.98030.9634
LVGI 1.16121.16191.5261.33541.38631.36991.10311.08121.05621.0614
TATA -0.3002-0.275-0.6579-0.4552-0.4896-0.4964-0.2337-0.2252-0.2369-0.2699
M-score -3.99-3.92-5.98-4.93-5.07-5.10-3.76-3.71-3.86-4.03
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