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Fusion-io Inc (NYSE:FIO)
Beneish M-Score
-2.71 (As of Today)

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.

FIO' s 10-Year Beneish M-Score Range
Min: -3.23   Max: -2.35
Current: -2.71

-3.23
-2.35

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.


Definition

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
=-2.71

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

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

Measured as the ratio of days’ sales in receivables in year t to year t-1.

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)
=0.13461826 / 0.12733978
=1.0572

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(49.753 / 439.517) / (53.013 / 374.496)
=0.57977052 / 0.5675815
=1.0215

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

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)
=0.29406686 / 0.10290465
=2.8577

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=374.496 / 439.517
=0.8521

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))
=0.25900238 / 0.3869592
=0.6693

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)
=0.549851 / 0.37378076
=1.4711

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)
=0.14865577 / 0.11595779
=1.282

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(-93.088 - 0.193 - -3.647) / 594.205
=-0.1508

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.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Fusion-io Inc Annual Data

Jun09Jun10Jun11Jun12Jun13
DSRI 1.0126
GMI 0.9471
AQI 2.5961
SGI 1.2032
DEPI 0.7083
SGAI 1.1184
LVGI 1.2455
TATA -0.1277
M-score -2.40

Fusion-io Inc Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.38420.76741.01260.97931.0572
GMI 1.0040.97940.94790.94861.0215
AQI 0.78321.03942.59612.86692.8577
SGI 1.47761.33441.20320.99380.8521
DEPI 0.92390.77220.70830.67860.6693
SGAI 0.97671.01331.10731.32581.4711
LVGI 1.3541.22751.24550.9121.282
TATA -0.0965-0.1564-0.1277-0.1085-0.1508
M-score -2.36-3.23-2.40-2.35-2.71
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