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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 13 years, the highest Beneish M-Score of ExlService Holdings Inc was -2.17. The lowest was -2.83. And the median was -2.50.
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 * 1.0102||+||0.528 * 1.1735||+||0.404 * 1.0352||+||0.892 * 1.0435||+||0.115 * 1.097|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.054||+||4.679 * -0.0596||-||0.327 * 1.4766|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $80.2 Mil.|
Revenue was 135.286 + 122.457 + 119.738 + 121.797 = $499.3 Mil.
Gross Profit was 43.915 + 37.474 + 38.479 + 46.875 = $166.7 Mil.
Total Current Assets was $302.4 Mil.
Total Assets was $573.6 Mil.
Property, Plant and Equipment(Net PPE) was $45.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $28.0 Mil.
Selling, General & Admin. Expense(SGA) was $104.7 Mil.
Total Current Liabilities was $91.0 Mil.
Long-Term Debt was $50.6 Mil.
Net Income was 7.46 + 6.075 + 7.762 + 11.147 = $32.4 Mil.
Non Operating Income was 0.323 + 0.642 + -0.137 + -0.833 = $-0.0 Mil.
Cash Flow from Operations was 22.354 + 16.552 + 22.788 + 4.965 = $66.7 Mil.
|Accounts Receivable was $76.1 Mil.
Revenue was 124.123 + 122.315 + 116.008 + 116.006 = $478.5 Mil.
Gross Profit was 52.073 + 50.266 + 42.078 + 43.093 = $187.5 Mil.
Total Current Assets was $252.6 Mil.
Total Assets was $463.4 Mil.
Property, Plant and Equipment(Net PPE) was $34.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $24.9 Mil.
Selling, General & Admin. Expense(SGA) was $95.2 Mil.
Total Current Liabilities was $76.1 Mil.
Long-Term Debt was $1.4 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)|
|=||(80.244 / 499.278)||/||(76.121 / 478.452)|
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)|
|=||(37.474 / 478.452)||/||(43.915 / 499.278)|
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 - (302.391 + 45.369) / 573.556)||/||(1 - (252.627 + 34.564) / 463.432)|
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))|
|=||(24.917 / (24.917 + 34.564))||/||(28.028 / (28.028 + 45.369))|
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)|
|=||(104.675 / 499.278)||/||(95.173 / 478.452)|
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)|
|=||((50.56 + 90.968) / 573.556)||/||((1.371 + 76.075) / 463.432)|
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|
|=||(32.444 - -0.005||-||66.659)||/||573.556|
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 -2.76 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
ExlService Holdings Inc Annual Data
ExlService Holdings Inc Quarterly Data