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EarthLink Holdings Corp (NAS:ELNK)
Beneish M-Score
-5.07 (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 -5.07 suggests that the company is not a manipulator.

ELNK' s 10-Year Beneish M-Score Range
Min: -5.98   Max: 1.06
Current: -5.07

-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 -2.86.


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 * 1.0222+0.528 * 1.0155+0.404 * 0.692+0.892 * 0.9344+0.115 * 0.9377
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0635+4.679 * -0.4895-0.327 * 1.3863
=-5.07

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $105 Mil.
Revenue was 297.358 + 297.32 + 301.839 + 308.578 = $1,205 Mil.
Gross Profit was 153.17 + 151.444 + 151.661 + 163.818 = $620 Mil.
Total Current Assets was $236 Mil.
Total Assets was $938 Mil.
Property, Plant and Equipment(Net PPE) was $416 Mil.
Depreciation, Depletion and Amortization(DDA) was $188 Mil.
Selling, General & Admin. Expense(SGA) was $426 Mil.
Total Current Liabilities was $198 Mil.
Long-Term Debt was $607 Mil.
Net Income was -21.838 + -26.47 + -279.873 + -11.338 = $-340 Mil.
Non Operating Income was 0.039 + -0.01 + -0.17 + -0.2 = $-0 Mil.
Cash Flow from Operations was 17.969 + 21.306 + 40.726 + 39.89 = $120 Mil.
Accounts Receivable was $110 Mil.
Revenue was 313.401 + 316.788 + 328.726 + 330.839 = $1,290 Mil.
Gross Profit was 160.463 + 163.922 + 174.054 + 175.497 = $674 Mil.
Total Current Assets was $294 Mil.
Total Assets was $1,304 Mil.
Property, Plant and Equipment(Net PPE) was $436 Mil.
Depreciation, Depletion and Amortization(DDA) was $180 Mil.
Selling, General & Admin. Expense(SGA) was $428 Mil.
Total Current Liabilities was $200 Mil.
Long-Term Debt was $607 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)
=(104.947 / 1205.095) / (109.878 / 1289.754)
=0.08708608 / 0.08519299
=1.0222

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)
=(151.444 / 1289.754) / (153.17 / 1205.095)
=0.52253065 / 0.51455943
=1.0155

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 - (236.461 + 415.707) / 937.841) / (1 - (294.286 + 435.587) / 1303.829)
=0.30460707 / 0.44020803
=0.692

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
=1205.095 / 1289.754
=0.9344

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))
=(179.617 / (179.617 + 435.587)) / (187.959 / (187.959 + 415.707))
=0.29196332 / 0.31136257
=0.9377

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)
=(425.594 / 1205.095) / (428.31 / 1289.754)
=0.3531622 / 0.33208658
=1.0635

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)
=((606.536 + 198.104) / 937.841) / ((606.689 + 200.248) / 1303.829)
=0.85797059 / 0.61889788
=1.3863

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
=(-339.519 - -0.341 - 119.891) / 937.841
=-0.4895

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 -5.07 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 0.8761.24571.41670.86940.93770.8883.40660.90240.96720.9619
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 -3.08-2.38-2.26-3.37-3.00-2.41-0.12-1.81-3.02-5.98

EarthLink Holdings Corp Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.90770.71580.95620.96481.09061.03890.96560.96430.96041.0222
GMI 1.11351.0841.06561.04761.04411.02021.01131.01911.01331.0155
AQI 1.27871.11171.10230.99530.85760.89180.95210.62680.73250.692
SGI 1.99931.50941.20281.01850.92610.93030.9320.92690.93160.9344
DEPI 0.44090.53690.73880.95751.08651.10731.12441.03230.97240.9377
SGAI 1.06691.02761.03761.04191.0421.06111.06531.06591.0691.0635
LVGI 1.07220.90660.91761.00161.17031.16121.16191.5261.33541.3863
TATA -0.0786-0.1033-0.116-0.114-0.2878-0.3002-0.275-0.6579-0.4551-0.4895
M-score -1.97-2.71-2.82-3.02-3.90-3.99-3.92-5.98-4.93-5.07
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