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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 -3.52. And the median was -2.67.
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 * 0.6207||+||0.528 * 0.9949||+||0.404 * 0.9557||+||0.892 * 1.0388||+||0.115 * 1.0555|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0135||+||4.679 * -0.129||-||0.327 * 1.0548|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $40.0 Mil.|
Revenue was 73.346 + 73.642 + 80.691 + 81.098 = $308.8 Mil.
Gross Profit was 23.879 + 22.845 + 26.104 + 25.657 = $98.5 Mil.
Total Current Assets was $109.2 Mil.
Total Assets was $436.9 Mil.
Property, Plant and Equipment(Net PPE) was $28.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.2 Mil.
Selling, General & Admin. Expense(SGA) was $87.9 Mil.
Total Current Liabilities was $33.9 Mil.
Long-Term Debt was $129.3 Mil.
Net Income was -9.572 + -15.41 + -12.84 + -8.004 = $-45.8 Mil.
Non Operating Income was -2.531 + -1.634 + -2.603 + -2.562 = $-9.3 Mil.
Cash Flow from Operations was 11.014 + 1.107 + -1.821 + 9.564 = $19.9 Mil.
|Accounts Receivable was $62.1 Mil.
Revenue was 75.869 + 68.848 + 73.569 + 78.969 = $297.3 Mil.
Gross Profit was 24.254 + 20.241 + 23.338 + 26.494 = $94.3 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 $20.2 Mil.
Selling, General & Admin. Expense(SGA) was $83.5 Mil.
Total Current Liabilities was $38.9 Mil.
Long-Term Debt was $126.9 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)|
|=||(40.032 / 308.777)||/||(62.088 / 297.255)|
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)|
|=||(94.327 / 297.255)||/||(98.485 / 308.777)|
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 - (109.152 + 28.227) / 436.921)||/||(1 - (101.994 + 30.293) / 468.04)|
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))|
|=||(20.173 / (20.173 + 30.293))||/||(17.206 / (17.206 + 28.227))|
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)|
|=||(87.862 / 308.777)||/||(83.453 / 297.255)|
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)|
|=||((129.308 + 33.925) / 436.921)||/||((126.886 + 38.889) / 468.04)|
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|
|=||(-45.826 - -9.33||-||19.864)||/||436.921|
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 -3.43 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