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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.
Fusion-io Inc has a M-score of -2.71 suggests that the company is not a manipulator.
During the past 5 years, the highest Beneish M-Score of Fusion-io Inc was -2.35. The lowest was -3.23. And the median was -2.40.
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 Fusion-io 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 * 1.0572||+||0.528 * 1.0215||+||0.404 * 2.8577||+||0.892 * 0.8521||+||0.115 * 0.6693|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.4711||+||4.679 * -0.1508||-||0.327 * 1.282|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $50.4 Mil.|
Revenue was 94.501 + 86.293 + 106.052 + 87.65 = $374.5 Mil.
Gross Profit was 53.013 + 49.753 + 61.532 + 48.259 = $212.6 Mil.
Total Current Assets was $385.7 Mil.
Total Assets was $594.2 Mil.
Property, Plant and Equipment(Net PPE) was $33.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.3 Mil.
Selling, General & Admin. Expense(SGA) was $205.9 Mil.
Total Current Liabilities was $88.3 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -21.301 + -27.896 + -23.844 + -20.047 = $-93.1 Mil.
Non Operating Income was 0.023 + 0.186 + 0.024 + -0.04 = $0.2 Mil.
Cash Flow from Operations was 13.005 + -17.146 + -6.426 + 6.92 = $-3.6 Mil.
|Accounts Receivable was $56.0 Mil.
Revenue was 120.569 + 118.115 + 106.596 + 94.237 = $439.5 Mil.
Gross Profit was 74.421 + 70.05 + 61.291 + 49.057 = $254.8 Mil.
Total Current Assets was $508.3 Mil.
Total Assets was $605.1 Mil.
Property, Plant and Equipment(Net PPE) was $34.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.1 Mil.
Selling, General & Admin. Expense(SGA) was $164.3 Mil.
Total Current Liabilities was $70.2 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)|
|=||(50.414 / 374.496)||/||(55.968 / 439.517)|
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)|
|=||(49.753 / 439.517)||/||(53.013 / 374.496)|
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 - (385.688 + 33.781) / 594.205)||/||(1 - (508.292 + 34.509) / 605.065)|
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))|
|=||(12.062 / (12.062 + 34.509))||/||(21.323 / (21.323 + 33.781))|
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)|
|=||(205.917 / 374.496)||/||(164.283 / 439.517)|
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 + 88.332) / 594.205)||/||((0 + 70.162) / 605.065)|
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|
|=||(-93.088 - 0.193||-||-3.647)||/||594.205|
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.
Fusion-io 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
Fusion-io Inc Annual Data
Fusion-io Inc Quarterly Data