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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 7 years, the highest Beneish M-Score of KEYW Holding Corp was -1.69. The lowest was -3.58. 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 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 * 0.7423||+||0.528 * 0.9932||+||0.404 * 0.9502||+||0.892 * 1.0616||+||0.115 * 1.0011|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0198||+||4.679 * -0.1823||-||0.327 * 1.1155|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $51.6 Mil.|
Revenue was 73.642 + 80.691 + 81.098 + 78.387 = $313.8 Mil.
Gross Profit was 22.845 + 26.104 + 25.657 + 25.786 = $100.4 Mil.
Total Current Assets was $112.9 Mil.
Total Assets was $441.6 Mil.
Property, Plant and Equipment(Net PPE) was $28.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.9 Mil.
Selling, General & Admin. Expense(SGA) was $97.1 Mil.
Total Current Liabilities was $37.4 Mil.
Long-Term Debt was $127.7 Mil.
Net Income was -15.41 + -12.84 + -8.004 + -35.267 = $-71.5 Mil.
Non Operating Income was -1.634 + -2.603 + -2.562 + -2.55 = $-9.3 Mil.
Cash Flow from Operations was 1.107 + -1.821 + 9.739 + 9.31 = $18.3 Mil.
|Accounts Receivable was $65.5 Mil.
Revenue was 68.848 + 73.569 + 78.969 + 74.229 = $295.6 Mil.
Gross Profit was 20.241 + 23.338 + 26.494 + 23.849 = $93.9 Mil.
Total Current Assets was $103.7 Mil.
Total Assets was $470.4 Mil.
Property, Plant and Equipment(Net PPE) was $29.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $20.0 Mil.
Selling, General & Admin. Expense(SGA) was $89.7 Mil.
Total Current Liabilities was $32.0 Mil.
Long-Term Debt was $125.6 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)|
|=||(51.633 / 313.818)||/||(65.524 / 295.615)|
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)|
|=||(93.922 / 295.615)||/||(100.392 / 313.818)|
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 - (112.86 + 27.958) / 441.603)||/||(1 - (103.688 + 29.513) / 470.385)|
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))|
|=||(19.958 / (19.958 + 29.513))||/||(18.873 / (18.873 + 27.958))|
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)|
|=||(97.143 / 313.818)||/||(89.729 / 295.615)|
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)|
|=||((127.742 + 37.351) / 441.603)||/||((125.605 + 32.044) / 470.385)|
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|
|=||(-71.521 - -9.349||-||18.335)||/||441.603|
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 -3.58 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