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EarthLink Holdings Corp (NAS:ELNK)
Beneish M-Score
-3.95 (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 -3.95 suggests that the company is not a manipulator.

ELNK' s Beneish M-Score Range Over the Past 10 Years
Min: -5.97   Max: 1.09
Current: -3.95

-5.97
1.09

During the past 13 years, the highest Beneish M-Score of EarthLink Holdings Corp was 1.09. The lowest was -5.97. And the median was -3.00.


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 * 0.9523+0.528 * 1.0041+0.404 * 0.8354+0.892 * 0.8933+0.115 * 1.0015
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9504+4.679 * -0.2714-0.327 * 1.006
=-3.95

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $73 Mil.
Revenue was 240.357 + 254.262 + 260.237 + 270.904 = $1,026 Mil.
Gross Profit was 129.423 + 139.056 + 138.51 + 148.513 = $556 Mil.
Total Current Assets was $176 Mil.
Total Assets was $663 Mil.
Property, Plant and Equipment(Net PPE) was $338 Mil.
Depreciation, Depletion and Amortization(DDA) was $167 Mil.
Selling, General & Admin. Expense(SGA) was $337 Mil.
Total Current Liabilities was $166 Mil.
Long-Term Debt was $437 Mil.
Net Income was 4.115 + 7.867 + -12.282 + -10.523 = $-11 Mil.
Non Operating Income was -0.226 + 5.495 + -0.009 + -2.516 = $3 Mil.
Cash Flow from Operations was 40.308 + 10.63 + 41.359 + 73.962 = $166 Mil.
Accounts Receivable was $86 Mil.
Revenue was 283.664 + 282.447 + 284.472 + 297.745 = $1,148 Mil.
Gross Profit was 156.616 + 152.985 + 152.795 + 162.05 = $624 Mil.
Total Current Assets was $203 Mil.
Total Assets was $799 Mil.
Property, Plant and Equipment(Net PPE) was $382 Mil.
Depreciation, Depletion and Amortization(DDA) was $189 Mil.
Selling, General & Admin. Expense(SGA) was $398 Mil.
Total Current Liabilities was $157 Mil.
Long-Term Debt was $567 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)
=(72.75 / 1025.76) / (85.524 / 1148.328)
=0.07092302 / 0.07447698
=0.9523

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)
=(624.446 / 1148.328) / (555.502 / 1025.76)
=0.54378714 / 0.54155163
=1.0041

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 - (176.206 + 338.009) / 662.515) / (1 - (202.711 + 382.256) / 799.065)
=0.22384399 / 0.26793565
=0.8354

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
=1025.76 / 1148.328
=0.8933

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))
=(189.389 / (189.389 + 382.256)) / (167.098 / (167.098 + 338.009))
=0.33130527 / 0.33081703
=1.0015

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)
=(337.493 / 1025.76) / (397.544 / 1148.328)
=0.32901751 / 0.34619377
=0.9504

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)
=((437.492 + 166.477) / 662.515) / ((566.961 + 157.14) / 799.065)
=0.91163068 / 0.90618535
=1.006

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
=(-10.823 - 2.744 - 166.259) / 662.515
=-0.2714

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 -3.95 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.41670.86940.93770.8883.40660.91180.95720.96190.96860.8654
GMI 1.06351.0481.02190.98321.01611.12631.05111.02020.97990.968
AQI 1.38651.08440.63460.81121.63811.30470.99530.62680.83820.8772
SGI 1.00850.93460.78580.75740.85972.09021.02660.92920.94860.9323
DEPI 1.20960.66650.98411.24.65350.30370.95711.03230.93280.9407
SGAI 1.04940.88090.6530.8920.9341.06611.05131.06861.03670.9439
LVGI 1.78851.20380.66690.74271.62481.07971.00161.5261.10041.0495
TATA -0.0267-0.1457-0.06470.0743-0.0485-0.0662-0.114-0.6558-0.2366-0.2721
M-score -2.27-3.37-3.00-2.41-0.12-1.83-3.02-5.97-3.78-4.02

EarthLink Holdings Corp Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.96041.02221.04220.96860.97140.85520.83640.86540.92330.9523
GMI 1.01331.01551.00920.97990.96140.94630.95050.9680.98051.0041
AQI 0.73250.6920.62130.83820.87650.87960.90430.87720.85080.8354
SGI 0.93160.93440.94220.94860.95160.95290.93910.93230.920.8933
DEPI 0.97240.93770.93570.93280.94160.93980.92670.94070.94461.0015
SGAI 1.0691.06351.04411.03671.0060.98030.96340.94390.9460.9504
LVGI 1.33541.38631.36991.10041.08121.05621.06141.04951.01561.006
TATA -0.4531-0.4874-0.4943-0.2366-0.2253-0.2381-0.2712-0.2734-0.2732-0.2714
M-score -4.92-5.06-5.09-3.78-3.71-3.87-4.04-4.02-3.97-3.95
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