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GuruFocus has detected 2 Warning Signs with ExlService Holdings Inc $EXLS.
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ExlService Holdings Inc (NAS:EXLS)
Beneish M-Score
-2.63 (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.

ExlService Holdings Inc has a M-score of -2.63 suggests that the company is not a manipulator.

EXLS' s Beneish M-Score Range Over the Past 10 Years
Min: -2.83   Max: -0.72
Current: -2.63

-2.83
-0.72

During the past 13 years, the highest Beneish M-Score of ExlService Holdings Inc was -0.72. The lowest was -2.83. And the median was -2.58.


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 ExlService Holdings 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 * 1.1181+0.528 * 1.0344+0.404 * 0.9738+0.892 * 1.0915+0.115 * 0.9575
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0063+4.679 * -0.0819-0.327 * 0.878
=-2.63

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $113.1 Mil.
Revenue was 177.274 + 171.2 + 170.478 + 167.036 = $686.0 Mil.
Gross Profit was 61.49 + 59.433 + 58.452 + 58.657 = $238.0 Mil.
Total Current Assets was $378.8 Mil.
Total Assets was $706.5 Mil.
Property, Plant and Equipment(Net PPE) was $49.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $34.6 Mil.
Selling, General & Admin. Expense(SGA) was $139.2 Mil.
Total Current Liabilities was $124.2 Mil.
Long-Term Debt was $35.3 Mil.
Net Income was 15.488 + 16.05 + 16.375 + 13.82 = $61.7 Mil.
Non Operating Income was 10.961 + 1.716 + 5.229 + 1.426 = $19.3 Mil.
Cash Flow from Operations was 44.216 + 29.127 + 37.356 + -10.441 = $100.3 Mil.
Accounts Receivable was $92.7 Mil.
Revenue was 165.858 + 163.503 + 155.621 + 143.51 = $628.5 Mil.
Gross Profit was 59.742 + 60.305 + 55.143 + 50.385 = $225.6 Mil.
Total Current Assets was $339.2 Mil.
Total Assets was $650.8 Mil.
Property, Plant and Equipment(Net PPE) was $48.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $31.5 Mil.
Selling, General & Admin. Expense(SGA) was $126.8 Mil.
Total Current Liabilities was $107.1 Mil.
Long-Term Debt was $60.3 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)
=(113.067 / 685.988) / (92.65 / 628.492)
=0.16482358 / 0.14741636
=1.1181

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)
=(225.575 / 628.492) / (238.032 / 685.988)
=0.35891467 / 0.34699149
=1.0344

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 - (378.824 + 49.029) / 706.528) / (1 - (339.199 + 47.991) / 650.783)
=0.39442881 / 0.40503978
=0.9738

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
=685.988 / 628.492
=1.0915

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))
=(31.465 / (31.465 + 47.991)) / (34.58 / (34.58 + 49.029))
=0.39600534 / 0.41359184
=0.9575

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)
=(139.23 / 685.988) / (126.767 / 628.492)
=0.20296273 / 0.20170026
=1.0063

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)
=((35.3 + 124.231) / 706.528) / ((60.278 + 107.079) / 650.783)
=0.22579572 / 0.25716253
=0.878

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
=(61.733 - 19.332 - 100.258) / 706.528
=-0.0819

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.

ExlService Holdings Inc has a M-score of -2.63 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 local exchange's currency.

ExlService Holdings Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.9720.8590.98360.95790.88331.05920.97281.01020.91721.1181
GMI 1.07010.96480.89231.06431.02981.00950.98541.17350.93051.0344
AQI 1.10630.98021.37421.64871.41040.97990.87061.05561.0090.9738
SGI 1.47731.01011.05111.32331.42651.22851.08021.04351.25881.0915
DEPI 0.89081.21520.96981.02970.88950.89280.94131.0970.96430.9575
SGAI 1.08811.09311.02630.97530.90420.94160.9991.0540.96211.0063
LVGI 0.88840.92250.83221.08481.21230.8720.94571.47661.04220.878
TATA -0.0186-0.0504-0.0565-0.0462-0.0658-0.0492-0.064-0.0601-0.0799-0.0819
M-score -2.08-2.83-2.57-2.17-2.40-2.42-2.78-2.75-2.74-2.63

ExlService Holdings Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.98821.01021.0681.11991.060.91720.96260.98720.98391.1181
GMI 1.07961.17351.20881.14591.02140.93050.91120.94381.00151.0344
AQI 0.90991.05561.19311.21181.16321.0090.91070.91080.93180.9738
SGI 1.03421.04351.07591.14121.2251.25881.25151.19751.12821.0915
DEPI 1.22541.0970.95470.91740.91830.96430.92770.96860.98440.9575
SGAI 0.98661.0541.06321.02831.00830.96210.95570.96110.98071.0063
LVGI 0.97811.47661.95321.77071.64851.04220.85990.82950.83030.878
TATA -0.0806-0.0601-0.0541-0.0559-0.0572-0.0799-0.0582-0.0733-0.0744-0.0819
M-score -2.80-2.75-2.74-2.61-2.64-2.74-2.60-2.67-2.70-2.63
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