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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 -3.62. 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 * 1.0237||+||0.528 * 1.0132||+||0.404 * 1.1999||+||0.892 * 1.0843||+||0.115 * 1.3308|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9807||+||4.679 * -0.1213||-||0.327 * 0.9993|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $38.8 Mil.|
Revenue was 80.894 + 75.133 + 73.554 + 70.619 = $300.2 Mil.
Gross Profit was 65.094 + 60.864 + 59.836 + 57.586 = $243.4 Mil.
Total Current Assets was $136.6 Mil.
Total Assets was $177.7 Mil.
Property, Plant and Equipment(Net PPE) was $39.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $7.5 Mil.
Selling, General & Admin. Expense(SGA) was $215.3 Mil.
Total Current Liabilities was $37.4 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -6.351 + -2.735 + -11.843 + -9.237 = $-30.2 Mil.
Non Operating Income was 1.42 + -0.291 + -0.158 + 0.325 = $1.3 Mil.
Cash Flow from Operations was -5.349 + -2.186 + 1.036 + -3.404 = $-9.9 Mil.
|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 $202.5 Mil.
Total Current Liabilities was $42.6 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)|
|=||(38.829 / 300.2)||/||(34.979 / 276.856)|
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)|
|=||(60.864 / 276.856)||/||(65.094 / 300.2)|
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 - (136.557 + 39.311) / 177.721)||/||(1 - (175.044 + 25.171) / 201.97)|
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))|
|=||(6.841 / (6.841 + 25.171))||/||(7.52 / (7.52 + 39.311))|
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)|
|=||(215.294 / 300.2)||/||(202.45 / 276.856)|
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 + 37.436) / 177.721)||/||((0 + 42.575) / 201.97)|
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|
|=||(-30.166 - 1.296||-||-9.903)||/||177.721|
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 -2.82 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