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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 Exponent Inc was 6.81. The lowest was -4.47. And the median was -2.64.
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 Exponent 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 * 1.0129||+||0.528 * 0.9581||+||0.404 * 0.9732||+||0.892 * 1.0293||+||0.115 * 0.986|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.963||+||4.679 * -0.0421||-||0.327 * 0.9302|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $58.4 Mil.|
Revenue was 78.994 + 79.864 + 80.293 + 73.611 = $312.8 Mil.
Gross Profit was 31.65 + 29.495 + 25.026 + 24.969 = $111.1 Mil.
Total Current Assets was $269.5 Mil.
Total Assets was $369.0 Mil.
Property, Plant and Equipment(Net PPE) was $29.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $5.5 Mil.
Selling, General & Admin. Expense(SGA) was $15.6 Mil.
Total Current Liabilities was $69.6 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 11.719 + 11.697 + 10.333 + 9.243 = $43.0 Mil.
Non Operating Income was -2.195 + 0.553 + 2.009 + 1.661 = $2.0 Mil.
Cash Flow from Operations was 19.49 + 13.119 + 1.701 + 22.176 = $56.5 Mil.
|Accounts Receivable was $56.0 Mil.
Revenue was 78.557 + 76.574 + 75.962 + 72.772 = $303.9 Mil.
Gross Profit was 30.316 + 26.282 + 24.109 + 22.747 = $103.5 Mil.
Total Current Assets was $254.5 Mil.
Total Assets was $352.1 Mil.
Property, Plant and Equipment(Net PPE) was $28.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $5.3 Mil.
Selling, General & Admin. Expense(SGA) was $15.7 Mil.
Total Current Liabilities was $71.4 Mil.
Long-Term Debt was $0.0 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)|
|=||(58.382 / 312.762)||/||(55.999 / 303.865)|
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)|
|=||(29.495 / 303.865)||/||(31.65 / 312.762)|
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 - (269.458 + 29.39) / 368.981)||/||(1 - (254.483 + 28.812) / 352.056)|
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))|
|=||(5.263 / (5.263 + 28.812))||/||(5.459 / (5.459 + 29.39))|
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)|
|=||(15.571 / 312.762)||/||(15.709 / 303.865)|
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)|
|=||((0 + 69.563) / 368.981)||/||((0 + 71.355) / 352.056)|
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|
|=||(42.992 - 2.028||-||56.486)||/||368.981|
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.
Exponent Inc has a M-score of -2.64 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
Exponent Inc Annual Data
Exponent Inc Quarterly Data