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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 -2.49. The lowest was -2.68. And the median was -2.63.
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 * 0.9498||+||0.528 * 0.9522||+||0.404 * 1.0116||+||0.892 * 1.2591||+||0.115 * 1.0735|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0157||+||4.679 * -0.0375||-||0.327 * 1.0061|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|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.
Net Income was 3.836 + 3.415 + 3.532 + -0.289 = $10.5 Mil.
Non Operating Income was 0.379 + 0.006 + -0.191 + 0 = $0.2 Mil.
Cash Flow from Operations was 20.238 + 6.206 + 15.55 + 3.205 = $45.2 Mil.
|Accounts Receivable was $169.9 Mil.
Revenue was 158.811 + 152.354 + 156.148 + 148.703 = $616.0 Mil.
Gross Profit was 53.815 + 51.523 + 54.03 + 51.319 = $210.7 Mil.
Total Current Assets was $190.3 Mil.
Total Assets was $732.5 Mil.
Property, Plant and Equipment(Net PPE) was $11.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $62.7 Mil.
Selling, General & Admin. Expense(SGA) was $133.9 Mil.
Total Current Liabilities was $116.1 Mil.
Long-Term Debt was $333.0 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)|
|=||(203.189 / 775.615)||/||(169.905 / 616.016)|
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)|
|=||(73.481 / 616.016)||/||(71.509 / 775.615)|
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 - (231.958 + 15.726) / 930.144)||/||(1 - (190.25 + 10.95) / 732.513)|
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))|
|=||(62.748 / (62.748 + 10.95))||/||(60.28 / (60.28 + 15.726))|
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)|
|=||(171.197 / 775.615)||/||(133.87 / 616.016)|
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)|
|=||((393.853 + 179.899) / 930.144)||/||((332.97 + 116.134) / 732.513)|
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|
|=||(10.494 - 0.194||-||45.199)||/||930.144|
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 -2.49 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