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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 7 years, the highest Beneish M-Score of ExamWorks Group Inc was -2.40. The lowest was -2.77. And the median was -2.56.
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 * 1.008||+||0.528 * 1.0216||+||0.404 * 0.8502||+||0.892 * 1.1103||+||0.115 * 1.0451|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9469||+||4.679 * -0.036||-||0.327 * 1.0058|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $225.5 Mil.|
Revenue was 206.033 + 208.738 + 196.316 + 202.064 = $813.2 Mil.
Gross Profit was 71.587 + 72.313 + 68.14 + 71.509 = $283.5 Mil.
Total Current Assets was $376.3 Mil.
Total Assets was $1,068.4 Mil.
Property, Plant and Equipment(Net PPE) was $17.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $56.9 Mil.
Selling, General & Admin. Expense(SGA) was $169.9 Mil.
Total Current Liabilities was $136.4 Mil.
Long-Term Debt was $538.8 Mil.
Net Income was 7.155 + -7.863 + 2.024 + 3.836 = $5.2 Mil.
Non Operating Income was 0 + -18.619 + 0 + 0.379 = $-18.2 Mil.
Cash Flow from Operations was 27.577 + 7.887 + 6.164 + 20.238 = $61.9 Mil.
|Accounts Receivable was $201.5 Mil.
Revenue was 204.078 + 196.445 + 173.028 + 158.811 = $732.4 Mil.
Gross Profit was 73.481 + 71.594 + 61.993 + 53.815 = $260.9 Mil.
Total Current Assets was $227.0 Mil.
Total Assets was $940.0 Mil.
Property, Plant and Equipment(Net PPE) was $14.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $59.6 Mil.
Selling, General & Admin. Expense(SGA) was $161.6 Mil.
Total Current Liabilities was $177.3 Mil.
Long-Term Debt was $413.4 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)|
|=||(225.509 / 813.151)||/||(201.498 / 732.362)|
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)|
|=||(72.313 / 732.362)||/||(71.587 / 813.151)|
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 - (376.307 + 17.078) / 1068.421)||/||(1 - (226.96 + 14.528) / 940.017)|
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))|
|=||(59.595 / (59.595 + 14.528))||/||(56.949 / (56.949 + 17.078))|
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)|
|=||(169.873 / 813.151)||/||(161.569 / 732.362)|
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)|
|=||((538.838 + 136.405) / 1068.421)||/||((413.358 + 177.331) / 940.017)|
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|
|=||(5.152 - -18.24||-||61.866)||/||1068.421|
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 -2.58 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