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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 -0.97. The lowest was -3.79. And the median was -2.61.
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 * 0.9798||+||0.528 * 1.0611||+||0.404 * 1.035||+||0.892 * 1.0072||+||0.115 * 1.1272|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.973||+||4.679 * -0.0644||-||0.327 * 0.9569|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $87.4 Mil.|
Revenue was 77.013 + 77.612 + 77.295 + 83.156 = $315.1 Mil.
Gross Profit was 30.47 + 29.815 + 26.294 + 26.933 = $113.5 Mil.
Total Current Assets was $274.0 Mil.
Total Assets was $403.7 Mil.
Property, Plant and Equipment(Net PPE) was $36.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $6.1 Mil.
Selling, General & Admin. Expense(SGA) was $23.2 Mil.
Total Current Liabilities was $80.2 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 10.388 + 11.289 + 10.453 + 15.35 = $47.5 Mil.
Non Operating Income was 1.648 + 2.146 + 1.575 + 1.159 = $6.5 Mil.
Cash Flow from Operations was 29.712 + 22.689 + 14.232 + 0.313 = $66.9 Mil.
|Accounts Receivable was $88.6 Mil.
Revenue was 73.681 + 78.994 + 79.864 + 80.293 = $312.8 Mil.
Gross Profit was 28.924 + 36.141 + 29.495 + 25.026 = $119.6 Mil.
Total Current Assets was $272.8 Mil.
Total Assets was $387.5 Mil.
Property, Plant and Equipment(Net PPE) was $28.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $5.5 Mil.
Selling, General & Admin. Expense(SGA) was $23.7 Mil.
Total Current Liabilities was $80.5 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)|
|=||(87.409 / 315.076)||/||(88.577 / 312.832)|
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)|
|=||(119.586 / 312.832)||/||(113.512 / 315.076)|
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 - (274.044 + 36.71) / 403.744)||/||(1 - (272.786 + 28.485) / 387.507)|
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))|
|=||(5.479 / (5.479 + 28.485))||/||(6.131 / (6.131 + 36.71))|
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)|
|=||(23.204 / 315.076)||/||(23.678 / 312.832)|
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 + 80.236) / 403.744)||/||((0 + 80.474) / 387.507)|
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|
|=||(47.48 - 6.528||-||66.946)||/||403.744|
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 -2.71 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