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GuruFocus has detected 1 Warning Sign with Genomic Health Inc $GHDX.
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Genomic Health Inc (NAS:GHDX)
Beneish M-Score
-1.65 (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.

Genomic Health Inc has a M-score of -1.69 signals that the company is a manipulator.

GHDX' s Beneish M-Score Range Over the Past 10 Years
Min: -3.27   Max: -1.65
Current: -1.65

-3.27
-1.65

During the past 13 years, the highest Beneish M-Score of Genomic Health Inc was -1.65. The lowest was -3.27. And the median was -2.57.


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 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 * 0.8769+0.528 * 0.9968+0.404 * 4.5653+0.892 * 1.1379+0.115 * 0.9064
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9419+4.679 * -0.1459-0.327 * 0.9382
=-1.69

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $33.7 Mil.
Revenue was 82.258 + 81.974 + 80.894 + 75.133 = $320.3 Mil.
Gross Profit was 69.196 + 66.753 + 65.094 + 60.864 = $261.9 Mil.
Total Current Assets was $144.3 Mil.
Total Assets was $192.0 Mil.
Property, Plant and Equipment(Net PPE) was $39.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $8.6 Mil.
Selling, General & Admin. Expense(SGA) was $221.5 Mil.
Total Current Liabilities was $43.9 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -2.82 + -6.1 + -6.351 + -2.735 = $-18.0 Mil.
Non Operating Income was -0.111 + 0.526 + 1.42 + -0.291 = $1.5 Mil.
Cash Flow from Operations was 8.796 + 7.194 + -5.349 + -2.186 = $8.5 Mil.
Accounts Receivable was $33.8 Mil.
Revenue was 73.554 + 70.619 + 68.152 + 69.126 = $281.5 Mil.
Gross Profit was 59.836 + 57.586 + 55.39 + 56.625 = $229.4 Mil.
Total Current Assets was $142.0 Mil.
Total Assets was $178.3 Mil.
Property, Plant and Equipment(Net PPE) was $34.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $6.7 Mil.
Selling, General & Admin. Expense(SGA) was $206.7 Mil.
Total Current Liabilities was $43.5 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)
=(33.682 / 320.259) / (33.754 / 281.451)
=0.10517113 / 0.11992851
=0.8769

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)
=(229.437 / 281.451) / (261.907 / 320.259)
=0.81519341 / 0.81779747
=0.9968

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 - (144.349 + 39.465) / 191.951) / (1 - (142.005 + 34.682) / 178.343)
=0.04239103 / 0.00928548
=4.5653

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
=320.259 / 281.451
=1.1379

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))
=(6.749 / (6.749 + 34.682)) / (8.647 / (8.647 + 39.465))
=0.16289735 / 0.17972647
=0.9064

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)
=(221.548 / 320.259) / (206.715 / 281.451)
=0.69177759 / 0.73446177
=0.9419

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 + 43.944) / 191.951) / ((0 + 43.52) / 178.343)
=0.22893343 / 0.24402416
=0.9382

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
=(-18.006 - 1.544 - 8.455) / 191.951
=-0.1459

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 -1.69 signals that the company is likely to 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 local exchange's currency.

Genomic Health Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.24531.0020.93391.081.27310.92531.18961.12511.0209
GMI 0.90550.96710.96410.97110.96370.9921.00421.01931.0127
AQI 0.6930.91531.12542.27951.241.92171.26761.07610.1245
SGI 2.19471.72711.35241.19091.15731.1411.11241.05391.0426
DEPI 0.78681.13830.71910.82690.93891.56121.08781.07451.5836
SGAI 0.66180.77070.92780.98431.00910.99261.06861.12121.0096
LVGI 0.64881.23211.03460.91630.93960.90171.02231.22371.1209
TATA -0.0976-0.1762-0.1616-0.156-0.1017-0.1148-0.1158-0.1405-0.1136
M-score -1.67-2.73-2.98-2.45-2.48-2.49-2.65-3.02-3.28

Genomic Health Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.11241.12511.16071.01791.06661.02091.02370.90830.87690.8299
GMI 1.01111.01931.01381.0161.01711.01271.01321.00970.99680.9849
AQI 1.66261.07610.09790.10290.10380.12451.19991.37374.56534.5215
SGI 1.08771.05391.04281.01731.0221.04261.08431.12481.13791.1406
DEPI 0.94121.07451.24321.44691.66771.58361.33081.12490.90641.1878
SGAI 1.10671.13911.11121.09831.06290.99370.97320.93870.94190.9202
LVGI 1.14381.22371.1631.11711.3031.12090.99931.07050.93820.8858
TATA -0.1381-0.1405-0.1021-0.1046-0.1483-0.1136-0.1213-0.1623-0.1459-0.1344
M-score -2.74-3.02-3.17-3.30-3.48-3.27-2.82-3.05-1.69-1.65
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