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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 -3.82. And the median was -2.59.
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 * 1.0905||+||0.528 * 0.9342||+||0.404 * 1.0422||+||0.892 * 1.0288||+||0.115 * 0.9161|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0465||+||4.679 * -0.0323||-||0.327 * 1.0361|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $86.4 Mil.|
Revenue was 73.611 + 78.557 + 76.574 + 75.962 = $304.7 Mil.
Gross Profit was 24.969 + 30.316 + 26.282 + 24.109 = $105.7 Mil.
Total Current Assets was $266.5 Mil.
Total Assets was $365.3 Mil.
Property, Plant and Equipment(Net PPE) was $28.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $5.4 Mil.
Selling, General & Admin. Expense(SGA) was $15.8 Mil.
Total Current Liabilities was $79.3 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 9.243 + 11.04 + 11.264 + 9.154 = $40.7 Mil.
Non Operating Income was 1.661 + -0.896 + 2.274 + 1.227 = $4.3 Mil.
Cash Flow from Operations was 22.176 + 15.346 + 16.85 + -6.12 = $48.3 Mil.
|Accounts Receivable was $77.0 Mil.
Revenue was 72.772 + 75.231 + 75.505 + 72.66 = $296.2 Mil.
Gross Profit was 22.747 + 25.295 + 27.487 + 20.43 = $96.0 Mil.
Total Current Assets was $251.7 Mil.
Total Assets was $344.2 Mil.
Property, Plant and Equipment(Net PPE) was $28.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $5.0 Mil.
Selling, General & Admin. Expense(SGA) was $14.7 Mil.
Total Current Liabilities was $72.1 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)|
|=||(86.368 / 304.704)||/||(76.98 / 296.168)|
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)|
|=||(30.316 / 296.168)||/||(24.969 / 304.704)|
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 - (266.5 + 28.264) / 365.299)||/||(1 - (251.684 + 28.721) / 344.166)|
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))|
|=||(4.951 / (4.951 + 28.721))||/||(5.404 / (5.404 + 28.264))|
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)|
|=||(15.842 / 304.704)||/||(14.714 / 296.168)|
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 + 79.345) / 365.299)||/||((0 + 72.147) / 344.166)|
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|
|=||(40.701 - 4.266||-||48.252)||/||365.299|
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 -2.57 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