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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 Genomic Health Inc was 4.53. The lowest was -4.24. And the median was -2.70.
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 * 1.1607||+||0.528 * 1.0138||+||0.404 * 0.0979||+||0.892 * 1.0428||+||0.115 * 1.2432|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1004||+||4.679 * -0.1021||-||0.327 * 1.163|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $35.0 Mil.|
Revenue was 68.152 + 69.126 + 69.101 + 70.477 = $276.9 Mil.
Gross Profit was 55.39 + 56.625 + 57.122 + 58.27 = $227.4 Mil.
Total Current Assets was $175.0 Mil.
Total Assets was $202.0 Mil.
Property, Plant and Equipment(Net PPE) was $25.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $6.8 Mil.
Selling, General & Admin. Expense(SGA) was $198.0 Mil.
Total Current Liabilities was $42.6 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -9.493 + -6.267 + -6.262 + -4.618 = $-26.6 Mil.
Non Operating Income was -0.374 + -0.227 + -0.345 + 0.034 = $-0.9 Mil.
Cash Flow from Operations was -7.277 + -0.318 + 0.505 + 1.974 = $-5.1 Mil.
|Accounts Receivable was $28.9 Mil.
Revenue was 67.002 + 68.819 + 65.99 + 63.691 = $265.5 Mil.
Gross Profit was 54.947 + 58.004 + 55.209 + 52.934 = $221.1 Mil.
Total Current Assets was $139.9 Mil.
Total Assets was $173.3 Mil.
Property, Plant and Equipment(Net PPE) was $18.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $6.5 Mil.
Selling, General & Admin. Expense(SGA) was $172.6 Mil.
Total Current Liabilities was $31.4 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)|
|=||(34.979 / 276.856)||/||(28.901 / 265.502)|
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)|
|=||(56.625 / 265.502)||/||(55.39 / 276.856)|
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 - (175.044 + 25.171) / 201.97)||/||(1 - (139.888 + 18.065) / 173.337)|
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))|
|=||(6.536 / (6.536 + 18.065))||/||(6.841 / (6.841 + 25.171))|
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)|
|=||(198.008 / 276.856)||/||(172.556 / 265.502)|
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 + 42.575) / 201.97)||/||((0 + 31.419) / 173.337)|
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|
|=||(-26.64 - -0.912||-||-5.116)||/||201.97|
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 -3.17 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