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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.
Genomic Health Inc has a M-score of -2.89 suggests that the company is not a 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 -2.66.
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 * 1.0748||+||0.528 * 1.0109||+||0.404 * 1.4051||+||0.892 * 1.1075||+||0.115 * 0.9888|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.068||+||4.679 * -0.1463||-||0.327 * 1.1402|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $31.8 Mil.|
Revenue was 70.477 + 67.002 + 68.819 + 65.99 = $272.3 Mil.
Gross Profit was 58.27 + 54.947 + 58.004 + 55.209 = $226.4 Mil.
Total Current Assets was $146.5 Mil.
Total Assets was $178.0 Mil.
Property, Plant and Equipment(Net PPE) was $17.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $6.7 Mil.
Selling, General & Admin. Expense(SGA) was $179.4 Mil.
Total Current Liabilities was $32.4 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -4.618 + -7.445 + -9.369 + 0.488 = $-20.9 Mil.
Non Operating Income was 0.034 + -0.226 + -0.799 + 0.089 = $-0.9 Mil.
Cash Flow from Operations was 1.974 + 0.126 + -4.197 + 8.082 = $6.0 Mil.
|Accounts Receivable was $26.7 Mil.
Revenue was 63.691 + 63.094 + 60.427 + 58.648 = $245.9 Mil.
Gross Profit was 52.934 + 53.348 + 50.786 + 49.611 = $206.7 Mil.
Total Current Assets was $142.7 Mil.
Total Assets was $167.7 Mil.
Property, Plant and Equipment(Net PPE) was $15.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $5.9 Mil.
Selling, General & Admin. Expense(SGA) was $151.7 Mil.
Total Current Liabilities was $26.8 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)|
|=||(31.771 / 272.288)||/||(26.69 / 245.86)|
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)|
|=||(54.947 / 245.86)||/||(58.27 / 272.288)|
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 - (146.488 + 17.342) / 177.95)||/||(1 - (142.721 + 15.468) / 167.657)|
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))|
|=||(5.854 / (5.854 + 15.468))||/||(6.666 / (6.666 + 17.342))|
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)|
|=||(179.421 / 272.288)||/||(151.694 / 245.86)|
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 + 32.414) / 177.95)||/||((0 + 26.784) / 167.657)|
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|
|=||(-20.944 - -0.902||-||5.985)||/||177.95|
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 -2.89 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