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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 -2.78.
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 * 1.1744||+||0.528 * 1.0619||+||0.404 * 0.9282||+||0.892 * 1.0481||+||0.115 * 1.2566|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0903||+||4.679 * -0.0667||-||0.327 * 1.2782|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $65.5 Mil.|
Revenue was 71.634 + 73.525 + 78.969 + 74.229 = $298.4 Mil.
Gross Profit was 22.043 + 23.294 + 26.494 + 23.849 = $95.7 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 $19.7 Mil.
Selling, General & Admin. Expense(SGA) was $99.1 Mil.
Total Current Liabilities was $32.0 Mil.
Long-Term Debt was $125.6 Mil.
Net Income was -6.102 + -5.036 + -3.022 + -1.73 = $-15.9 Mil.
Non Operating Income was 2.543 + 2.508 + 4.241 + 1.198 = $10.5 Mil.
Cash Flow from Operations was -5.145 + -5.251 + 13.032 + 2.343 = $5.0 Mil.
|Accounts Receivable was $53.2 Mil.
Revenue was 63.807 + 68.828 + 73.773 + 78.258 = $284.7 Mil.
Gross Profit was 21.492 + 25.422 + 24.427 + 25.6 = $96.9 Mil.
Total Current Assets was $69.6 Mil.
Total Assets was $423.1 Mil.
Property, Plant and Equipment(Net PPE) was $26.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $27.1 Mil.
Selling, General & Admin. Expense(SGA) was $86.7 Mil.
Total Current Liabilities was $56.7 Mil.
Long-Term Debt was $54.3 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)|
|=||(65.524 / 298.357)||/||(53.234 / 284.666)|
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)|
|=||(23.294 / 284.666)||/||(22.043 / 298.357)|
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 - (103.688 + 29.513) / 470.385)||/||(1 - (69.605 + 26.767) / 423.145)|
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))|
|=||(27.08 / (27.08 + 26.767))||/||(19.692 / (19.692 + 29.513))|
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)|
|=||(99.102 / 298.357)||/||(86.722 / 284.666)|
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)|
|=||((125.605 + 32.044) / 470.385)||/||((54.25 + 56.7) / 423.145)|
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|
|=||(-15.89 - 10.49||-||4.979)||/||470.385|
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 -2.66 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