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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 -3.56. And the median was -2.75.
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 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 * 0.8||+||0.528 * 0.9365||+||0.404 * 0.9648||+||0.892 * 1.0395||+||0.115 * 1.1314|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.3508||+||4.679 * -0.0852||-||0.327 * 1.0704|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $47.8 Mil.|
Revenue was 72.111 + 73.346 + 73.642 + 88.992 = $308.1 Mil.
Gross Profit was 23.799 + 23.879 + 22.845 + 31.246 = $101.8 Mil.
Total Current Assets was $110.9 Mil.
Total Assets was $444.7 Mil.
Property, Plant and Equipment(Net PPE) was $32.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $15.1 Mil.
Selling, General & Admin. Expense(SGA) was $108.2 Mil.
Total Current Liabilities was $37.9 Mil.
Long-Term Debt was $130.9 Mil.
Net Income was 2.464 + -9.572 + -15.41 + -13.095 = $-35.6 Mil.
Non Operating Income was -2.612 + -2.531 + -1.634 + -2.603 = $-9.4 Mil.
Cash Flow from Operations was 1.518 + 11.014 + 1.107 + -1.996 = $11.6 Mil.
|Accounts Receivable was $57.5 Mil.
Revenue was 78.1 + 75.869 + 68.848 + 73.569 = $296.4 Mil.
Gross Profit was 23.848 + 24.254 + 20.241 + 23.338 = $91.7 Mil.
Total Current Assets was $104.3 Mil.
Total Assets was $472.8 Mil.
Property, Plant and Equipment(Net PPE) was $35.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $20.4 Mil.
Selling, General & Admin. Expense(SGA) was $77.1 Mil.
Total Current Liabilities was $39.5 Mil.
Long-Term Debt was $128.2 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)|
|=||(47.817 / 308.091)||/||(57.504 / 296.386)|
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)|
|=||(91.681 / 296.386)||/||(101.769 / 308.091)|
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 - (110.889 + 32.06) / 444.704)||/||(1 - (104.341 + 35.915) / 472.759)|
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))|
|=||(20.437 / (20.437 + 35.915))||/||(15.125 / (15.125 + 32.06))|
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)|
|=||(108.201 / 308.091)||/||(77.06 / 296.386)|
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)|
|=||((130.888 + 37.927) / 444.704)||/||((128.18 + 39.482) / 472.759)|
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|
|=||(-35.613 - -9.38||-||11.643)||/||444.704|
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 -3.14 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