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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.
During the past 8 years, the highest Beneish M-Score of ExamWorks Group Inc was -1.75. The lowest was -2.62. And the median was -2.41.
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 ExamWorks Group Inc 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 * 1.1432||+||0.528 * 1.0399||+||0.404 * 0.9324||+||0.892 * 1.0567||+||0.115 * 1.08|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9212||+||4.679 * -0.0246||-||0.327 * 1.0414|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $245.4 Mil.|
Revenue was 208.48 + 206.033 + 208.738 + 196.316 = $819.6 Mil.
Gross Profit was 71.033 + 71.587 + 72.313 + 68.14 = $283.1 Mil.
Total Current Assets was $312.1 Mil.
Total Assets was $1,051.7 Mil.
Property, Plant and Equipment(Net PPE) was $20.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $55.7 Mil.
Selling, General & Admin. Expense(SGA) was $166.7 Mil.
Total Current Liabilities was $140.3 Mil.
Long-Term Debt was $535.2 Mil.
Net Income was 4.275 + 7.155 + -7.863 + 2.024 = $5.6 Mil.
Non Operating Income was 0 + 0 + -18.619 + 0 = $-18.6 Mil.
Cash Flow from Operations was 8.402 + 27.577 + 7.887 + 6.164 = $50.0 Mil.
|Accounts Receivable was $203.2 Mil.
Revenue was 202.064 + 204.078 + 196.445 + 173.028 = $775.6 Mil.
Gross Profit was 71.509 + 73.481 + 71.594 + 61.993 = $278.6 Mil.
Total Current Assets was $232.0 Mil.
Total Assets was $930.1 Mil.
Property, Plant and Equipment(Net PPE) was $15.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $60.3 Mil.
Selling, General & Admin. Expense(SGA) was $171.2 Mil.
Total Current Liabilities was $179.9 Mil.
Long-Term Debt was $393.9 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(245.449 / 819.567)||/||(203.189 / 775.615)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(71.587 / 775.615)||/||(71.033 / 819.567)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (312.081 + 20.145) / 1051.681)||/||(1 - (231.958 + 15.726) / 930.144)|
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.
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))|
|=||(60.28 / (60.28 + 15.726))||/||(55.691 / (55.691 + 20.145))|
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)|
|=||(166.65 / 819.567)||/||(171.197 / 775.615)|
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)|
|=||((535.243 + 140.332) / 1051.681)||/||((393.853 + 179.899) / 930.144)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(5.591 - -18.619||-||50.03)||/||1051.681|
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.
ExamWorks Group Inc has a M-score of -2.41 suggests that the company will not be a manipulator.
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
ExamWorks Group Inc Annual Data
ExamWorks Group Inc Quarterly Data