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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 * 1.0048||+||0.528 * 0.9646||+||0.404 * 1.0887||+||0.892 * 1.0319||+||0.115 * 0.9271|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0112||+||4.679 * -0.0539||-||0.327 * 0.8419|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $88.1 Mil.|
Revenue was 80.293 + 73.611 + 78.557 + 76.574 = $309.0 Mil.
Gross Profit was 25.026 + 24.969 + 30.316 + 26.282 = $106.6 Mil.
Total Current Assets was $256.8 Mil.
Total Assets was $357.2 Mil.
Property, Plant and Equipment(Net PPE) was $27.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $5.5 Mil.
Selling, General & Admin. Expense(SGA) was $15.6 Mil.
Total Current Liabilities was $54.9 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 10.333 + 9.243 + 11.04 + 11.264 = $41.9 Mil.
Non Operating Income was 2.009 + 1.661 + -0.896 + 2.274 = $5.0 Mil.
Cash Flow from Operations was 1.701 + 22.176 + 15.346 + 16.85 = $56.1 Mil.
|Accounts Receivable was $84.9 Mil.
Revenue was 75.962 + 72.772 + 75.231 + 75.505 = $299.5 Mil.
Gross Profit was 24.109 + 22.747 + 25.295 + 27.487 = $99.6 Mil.
Total Current Assets was $249.6 Mil.
Total Assets was $342.0 Mil.
Property, Plant and Equipment(Net PPE) was $28.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $5.1 Mil.
Selling, General & Admin. Expense(SGA) was $15.0 Mil.
Total Current Liabilities was $62.4 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)|
|=||(88.076 / 309.035)||/||(84.946 / 299.47)|
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)|
|=||(24.969 / 299.47)||/||(25.026 / 309.035)|
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 - (256.825 + 27.587) / 357.243)||/||(1 - (249.641 + 28.314) / 341.994)|
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))|
|=||(5.124 / (5.124 + 28.314))||/||(5.463 / (5.463 + 27.587))|
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)|
|=||(15.632 / 309.035)||/||(14.98 / 299.47)|
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 + 54.878) / 357.243)||/||((0 + 62.402) / 341.994)|
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|
|=||(41.88 - 5.048||-||56.073)||/||357.243|
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