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EarthLink Holdings Corp (NAS:ELNK)
Beneish M-Score
-5.10 (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 -5.10 suggests that the company is not a manipulator.

ELNK' s 10-Year Beneish M-Score Range
Min: -5.98   Max: 1.54
Current: -5.1

-5.98
1.54

During the past 13 years, the highest Beneish M-Score of EarthLink Holdings Corp was 1.54. The lowest was -5.98. And the median was -2.84.


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 * 1.0446+0.528 * 1.009+0.404 * 0.6213+0.892 * 0.9401+0.115 * 0.9359
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0413+4.679 * -0.4963-0.327 * 1.3699
=-5.10

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
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.
Net Income was -1.952 + -21.838 + -26.47 + -279.873 = $-330 Mil.
Non Operating Income was -0.013 + 0.039 + -0.01 + -0.17 = $-0 Mil.
Cash Flow from Operations was 62.063 + 17.969 + 21.306 + 40.726 = $142 Mil.
Accounts Receivable was $107 Mil.
Revenue was 308.578 + 313.401 + 316.788 + 331.637 = $1,270 Mil.
Gross Profit was 163.818 + 160.463 + 163.922 + 175.489 = $664 Mil.
Total Current Assets was $265 Mil.
Total Assets was $1,289 Mil.
Property, Plant and Equipment(Net PPE) was $438 Mil.
Depreciation, Depletion and Amortization(DDA) was $181 Mil.
Selling, General & Admin. Expense(SGA) was $432 Mil.
Total Current Liabilities was $207 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)
=(105.501 / 1194.262) / (107.433 / 1270.404)
=0.08833991 / 0.08456601
=1.0446

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)
=(153.17 / 1270.404) / (162.05 / 1194.262)
=0.52242594 / 0.51774652
=1.009

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 - (267.814 + 414.802) / 951.115) / (1 - (264.657 + 438.474) / 1288.648)
=0.2822992 / 0.45436535
=0.6213

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
=1194.262 / 1270.404
=0.9401

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))
=(180.719 / (180.719 + 438.474)) / (187.986 / (187.986 + 414.802))
=0.29186215 / 0.31186089
=0.9359

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)
=(422.631 / 1194.262) / (431.739 / 1270.404)
=0.35388466 / 0.33984386
=1.0413

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)
=((606.382 + 216.417) / 951.115) / ((606.601 + 207.182) / 1288.648)
=0.86508887 / 0.63150139
=1.3699

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
=(-330.133 - -0.154 - 142.064) / 951.115
=-0.4963

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 -5.10 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 0.8761.24571.41650.86950.93770.8883.40660.90240.95720.9719
GMI 0.90271.28930.79351.04641.02191.00090.99811.13121.05011.0167
AQI 0.93551.2551.38651.08330.6370.80891.63811.30470.99530.6268
SGI 0.98590.93331.00870.93450.78580.75740.85972.1121.02650.9197
DEPI 1.18971.29051.20960.66650.98411.24.65350.30360.9571.0329
SGAI 0.97640.69231.53640.88110.6530.92460.90111.07841.04951.0582
LVGI 0.9480.9231.78851.20260.74250.66771.62481.08880.99321.526
TATA -0.0588-0.0443-0.0267-0.14550.04130.0743-0.0483-0.0662-0.114-0.6579
M-score -2.92-2.15-2.49-3.37-2.53-2.38-0.13-1.82-3.02-5.98

EarthLink Holdings Corp Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.71390.95090.95721.08181.03620.96880.97190.96821.02771.0446
GMI 1.09321.07771.05011.04661.02011.00921.01671.01081.01431.009
AQI 1.11171.10230.99530.85760.89180.95210.62680.73250.6920.6213
SGI 1.51341.20951.02650.93350.93280.92890.91970.92410.92940.9401
DEPI 0.53680.73850.9571.08591.10721.12471.03290.9730.9380.9359
SGAI 1.04081.0561.04951.04961.06461.06331.05821.06131.05791.0413
LVGI 0.90660.91760.99321.17031.16121.16191.5261.33541.38631.3699
TATA -0.1031-0.1159-0.1141-0.2878-0.3002-0.275-0.6579-0.4551-0.4895-0.4963
M-score -2.70-2.81-3.02-3.90-4.00-3.92-5.98-4.93-5.07-5.10
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