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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 6 years, the highest Beneish M-Score of KEYW Holding Corp was -1.74. The lowest was -3.67. And the median was -2.82.
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 KEYW Holding Corp 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 * 0.8467||+||0.528 * 1.0512||+||0.404 * 0.9807||+||0.892 * 1.078||+||0.115 * 1.172|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1066||+||4.679 * -0.1568||-||0.327 * 1.2312|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $62.1 Mil.|
Revenue was 78.387 + 71.634 + 73.525 + 78.969 = $302.5 Mil.
Gross Profit was 25.786 + 22.043 + 23.294 + 26.494 = $97.6 Mil.
Total Current Assets was $102.0 Mil.
Total Assets was $468.0 Mil.
Property, Plant and Equipment(Net PPE) was $30.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $19.9 Mil.
Selling, General & Admin. Expense(SGA) was $103.3 Mil.
Total Current Liabilities was $38.9 Mil.
Long-Term Debt was $126.9 Mil.
Net Income was -35.267 + -6.102 + -5.036 + -3.022 = $-49.4 Mil.
Non Operating Income was 2.55 + 2.543 + 2.508 + 4.241 = $11.8 Mil.
Cash Flow from Operations was 9.485 + -5.145 + -5.251 + 13.032 = $12.1 Mil.
|Accounts Receivable was $68.0 Mil.
Revenue was 74.229 + 63.807 + 68.828 + 73.773 = $280.6 Mil.
Gross Profit was 23.849 + 21.492 + 25.422 + 24.427 = $95.2 Mil.
Total Current Assets was $91.3 Mil.
Total Assets was $444.6 Mil.
Property, Plant and Equipment(Net PPE) was $28.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $24.3 Mil.
Selling, General & Admin. Expense(SGA) was $86.6 Mil.
Total Current Liabilities was $75.4 Mil.
Long-Term Debt was $52.5 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)|
|=||(62.088 / 302.515)||/||(68.024 / 280.637)|
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)|
|=||(22.043 / 280.637)||/||(25.786 / 302.515)|
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 - (101.994 + 30.293) / 468.04)||/||(1 - (91.333 + 28.036) / 444.579)|
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))|
|=||(24.346 / (24.346 + 28.036))||/||(19.907 / (19.907 + 30.293))|
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)|
|=||(103.326 / 302.515)||/||(86.623 / 280.637)|
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)|
|=||((126.886 + 38.889) / 468.04)||/||((52.5 + 75.392) / 444.579)|
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|
|=||(-49.427 - 11.842||-||12.121)||/||468.04|
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.
KEYW Holding Corp has a M-score of -3.34 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
KEYW Holding Corp Annual Data
KEYW Holding Corp Quarterly Data