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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 -2.85.
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 * 1.1021||+||0.528 * 1.0173||+||0.404 * 0.8901||+||0.892 * 0.9725||+||0.115 * 1.3419|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1551||+||4.679 * -0.0637||-||0.327 * 1.2623|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $60.9 Mil.|
Revenue was 73.525 + 78.969 + 74.229 + 63.807 = $290.5 Mil.
Gross Profit was 23.294 + 26.494 + 23.849 + 21.492 = $95.1 Mil.
Total Current Assets was $121.4 Mil.
Total Assets was $473.0 Mil.
Property, Plant and Equipment(Net PPE) was $29.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $19.4 Mil.
Selling, General & Admin. Expense(SGA) was $95.2 Mil.
Total Current Liabilities was $33.4 Mil.
Long-Term Debt was $124.3 Mil.
Net Income was -5.036 + -3.022 + -1.73 + -3.076 = $-12.9 Mil.
Non Operating Income was 2.508 + 4.241 + 1.198 + 0.857 = $8.8 Mil.
Cash Flow from Operations was -5.251 + 13.032 + 2.343 + -1.66 = $8.5 Mil.
|Accounts Receivable was $56.8 Mil.
Revenue was 68.828 + 73.773 + 78.258 + 77.872 = $298.7 Mil.
Gross Profit was 25.422 + 24.427 + 25.6 + 24.062 = $99.5 Mil.
Total Current Assets was $73.8 Mil.
Total Assets was $428.9 Mil.
Property, Plant and Equipment(Net PPE) was $26.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $30.7 Mil.
Selling, General & Admin. Expense(SGA) was $84.7 Mil.
Total Current Liabilities was $57.3 Mil.
Long-Term Debt was $56.0 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)|
|=||(60.912 / 290.53)||/||(56.831 / 298.731)|
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)|
|=||(26.494 / 298.731)||/||(23.294 / 290.53)|
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 - (121.391 + 29.341) / 473.033)||/||(1 - (73.758 + 26.826) / 428.949)|
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))|
|=||(30.667 / (30.667 + 26.826))||/||(19.357 / (19.357 + 29.341))|
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)|
|=||(95.154 / 290.53)||/||(84.7 / 298.731)|
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)|
|=||((124.338 + 33.411) / 473.033)||/||((56 + 57.325) / 428.949)|
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|
|=||(-12.864 - 8.804||-||8.464)||/||473.033|
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 -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
KEYW Holding Corp Annual Data
KEYW Holding Corp Quarterly Data