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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 14 years, the highest Beneish M-Score of Genomic Health Inc was 4.53. The lowest was -4.24. And the median was -2.67.
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 Genomic Health 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 * 1.1124||+||0.528 * 1.0111||+||0.404 * 1.6626||+||0.892 * 1.0877||+||0.115 * 0.9412|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0912||+||4.679 * -0.1381||-||0.327 * 1.1438|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $31.0 Mil.|
Revenue was 69.101 + 70.477 + 67.002 + 68.819 = $275.4 Mil.
Gross Profit was 57.122 + 58.27 + 54.947 + 58.004 = $228.3 Mil.
Total Current Assets was $145.2 Mil.
Total Assets was $179.3 Mil.
Property, Plant and Equipment(Net PPE) was $18.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $6.8 Mil.
Selling, General & Admin. Expense(SGA) was $187.6 Mil.
Total Current Liabilities was $33.6 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -6.262 + -4.618 + -7.445 + -9.369 = $-27.7 Mil.
Non Operating Income was -0.345 + 0.034 + -0.226 + -0.799 = $-1.3 Mil.
Cash Flow from Operations was 0.505 + 1.974 + 0.126 + -4.197 = $-1.6 Mil.
|Accounts Receivable was $25.6 Mil.
Revenue was 65.99 + 63.691 + 63.094 + 60.427 = $253.2 Mil.
Gross Profit was 55.209 + 52.934 + 53.348 + 50.786 = $212.3 Mil.
Total Current Assets was $149.0 Mil.
Total Assets was $176.7 Mil.
Property, Plant and Equipment(Net PPE) was $18.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $6.3 Mil.
Selling, General & Admin. Expense(SGA) was $158.1 Mil.
Total Current Liabilities was $28.9 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)|
|=||(30.967 / 275.399)||/||(25.594 / 253.202)|
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)|
|=||(58.27 / 253.202)||/||(57.122 / 275.399)|
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 - (145.208 + 18.099) / 179.345)||/||(1 - (148.954 + 18.242) / 176.7)|
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))|
|=||(6.267 / (6.267 + 18.242))||/||(6.751 / (6.751 + 18.099))|
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)|
|=||(187.616 / 275.399)||/||(158.081 / 253.202)|
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 + 33.587) / 179.345)||/||((0 + 28.931) / 176.7)|
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|
|=||(-27.694 - -1.336||-||-1.592)||/||179.345|
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.
Genomic Health Inc has a M-score of -2.74 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
Genomic Health Inc Annual Data
Genomic Health Inc Quarterly Data