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EarthLink Holdings Corp (NAS:ELNK)
Beneish M-Score
-3.86 (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 -3.86 suggests that the company is not a manipulator.

ELNK' s 10-Year Beneish M-Score Range
Min: -5.98   Max: 1.06
Current: -3.86

-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 -2.93.


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 * 0.8552+0.528 * 0.9463+0.404 * 0.8796+0.892 * 0.9529+0.115 * 0.9398
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9803+4.679 * -0.2371-0.327 * 1.0562
=-3.86

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
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.
Net Income was -9.922 + -10.483 + -22.492 + -1.952 = $-45 Mil.
Non Operating Income was -6.77 + -1.432 + -0.021 + -0.013 = $-8 Mil.
Cash Flow from Operations was 33.262 + 18.865 + 38.657 + 62.063 = $153 Mil.
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.



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)
=(85.524 / 1148.328) / (104.947 / 1205.095)
=0.07447698 / 0.08708608
=0.8552

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)
=(152.985 / 1205.095) / (156.616 / 1148.328)
=0.51455943 / 0.54378714
=0.9463

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 - (202.711 + 382.256) / 799.065) / (1 - (236.461 + 415.707) / 937.841)
=0.26793565 / 0.30460707
=0.8796

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
=1148.328 / 1205.095
=0.9529

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))
=(187.959 / (187.959 + 415.707)) / (189.389 / (189.389 + 382.256))
=0.31136257 / 0.33130527
=0.9398

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)
=(397.544 / 1148.328) / (425.594 / 1205.095)
=0.34619377 / 0.3531622
=0.9803

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)
=((566.961 + 157.14) / 799.065) / ((606.536 + 198.104) / 937.841)
=0.90618535 / 0.85797059
=1.0562

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
=(-44.849 - -8.236 - 152.847) / 799.065
=-0.2371

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 -3.86 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

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 1.09061.03890.96560.96430.96041.02221.04220.96860.97140.8552
GMI 1.04411.02021.01131.01911.01331.01551.00920.97990.96140.9463
AQI 0.85760.89180.95210.62680.73250.6920.62130.86590.87650.8796
SGI 0.92610.93030.9320.92690.93160.93440.94220.94860.95160.9529
DEPI 1.08651.10731.12441.03230.97240.93770.93570.93280.94160.9398
SGAI 1.0421.06111.06531.06591.0691.06351.04411.03671.0060.9803
LVGI 1.17031.16121.16191.5261.33541.38631.36991.10311.08121.0562
TATA -0.2878-0.3002-0.275-0.6579-0.4552-0.4896-0.4964-0.2339-0.2253-0.2371
M-score -3.90-3.99-3.92-5.98-4.93-5.07-5.10-3.76-3.71-3.86
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