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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.
Guidewire Software Inc has a M-score of -2.27 suggests that the company is not a manipulator.
During the past 5 years, the highest Beneish M-Score of Guidewire Software Inc was 0.53. The lowest was -2.27. And the median was -1.75.
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 Guidewire Software 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 * 0.9993||+||0.528 * 1.0267||+||0.404 * 1.5006||+||0.892 * 1.2124||+||0.115 * 0.699|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0793||+||4.679 * -0.0703||-||0.327 * 0.4438|
|This Year (Apr14) TTM:||Last Year (Apr13) TTM:|
|Accounts Receivable was $58.3 Mil.|
Revenue was 82.035 + 83.475 + 66.529 + 96.91 = $328.9 Mil.
Gross Profit was 44.693 + 44.754 + 26.609 + 60.104 = $176.2 Mil.
Total Current Assets was $503.2 Mil.
Total Assets was $733.7 Mil.
Property, Plant and Equipment(Net PPE) was $12.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $6.6 Mil.
Selling, General & Admin. Expense(SGA) was $106.5 Mil.
Total Current Liabilities was $88.5 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -1.358 + -0.892 + -10.615 + 12.105 = $-0.8 Mil.
Non Operating Income was 0.19 + -0.022 + 0.204 + -0.027 = $0.3 Mil.
Cash Flow from Operations was 20.324 + 20.312 + -14.583 + 24.435 = $50.5 Mil.
|Accounts Receivable was $48.1 Mil.
Revenue was 68.25 + 72.188 + 63.301 + 67.589 = $271.3 Mil.
Gross Profit was 32.258 + 40.8 + 35.744 + 40.383 = $149.2 Mil.
Total Current Assets was $227.6 Mil.
Total Assets was $299.2 Mil.
Property, Plant and Equipment(Net PPE) was $12.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $4.0 Mil.
Selling, General & Admin. Expense(SGA) was $81.4 Mil.
Total Current Liabilities was $81.3 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)|
|=||(58.319 / 328.949)||/||(48.137 / 271.328)|
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)|
|=||(44.754 / 271.328)||/||(44.693 / 328.949)|
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 - (503.194 + 12.459) / 733.708)||/||(1 - (227.566 + 12.348) / 299.165)|
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))|
|=||(3.952 / (3.952 + 12.348))||/||(6.617 / (6.617 + 12.459))|
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)|
|=||(106.511 / 328.949)||/||(81.402 / 271.328)|
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 + 88.466) / 733.708)||/||((0 + 81.281) / 299.165)|
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|
|=||(-0.76 - 0.345||-||50.488)||/||733.708|
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.
Guidewire Software Inc has a M-score of -2.27 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
Guidewire Software Inc Annual Data
Guidewire Software Inc Quarterly Data