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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 13 years, the highest Beneish M-Score of Mattersight Corp was 1.63. The lowest was -7.62. And the median was -3.19.
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 Mattersight 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 * 1.3493||+||0.528 * 1.0708||+||0.404 * 1.4456||+||0.892 * 1.0551||+||0.115 * 0.9856|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1697||+||4.679 * -0.0134||-||0.327 * 2.0768|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $5.45 Mil.|
Revenue was 10.412 + 9.074 + 10.053 + 10.372 = $39.91 Mil.
Gross Profit was 6.969 + 5.879 + 6.807 + 7.479 = $27.13 Mil.
Total Current Assets was $26.80 Mil.
Total Assets was $47.07 Mil.
Property, Plant and Equipment(Net PPE) was $9.74 Mil.
Depreciation, Depletion and Amortization(DDA) was $5.63 Mil.
Selling, General & Admin. Expense(SGA) was $29.04 Mil.
Total Current Liabilities was $13.61 Mil.
Long-Term Debt was $23.22 Mil.
Net Income was -5.838 + -6.2 + -5.821 + -4.361 = $-22.22 Mil.
Non Operating Income was 0.066 + 0 + 0 + -0.004 = $0.06 Mil.
Cash Flow from Operations was -7.485 + -5.23 + -5.373 + -3.564 = $-21.65 Mil.
|Accounts Receivable was $3.83 Mil.
Revenue was 10.482 + 9.742 + 9.316 + 8.286 = $37.83 Mil.
Gross Profit was 7.943 + 7.073 + 6.741 + 5.78 = $27.54 Mil.
Total Current Assets was $30.37 Mil.
Total Assets was $45.28 Mil.
Property, Plant and Equipment(Net PPE) was $7.90 Mil.
Depreciation, Depletion and Amortization(DDA) was $4.46 Mil.
Selling, General & Admin. Expense(SGA) was $23.53 Mil.
Total Current Liabilities was $15.56 Mil.
Long-Term Debt was $1.50 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)|
|=||(5.447 / 39.911)||/||(3.826 / 37.826)|
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)|
|=||(27.537 / 37.826)||/||(27.134 / 39.911)|
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 - (26.802 + 9.743) / 47.066)||/||(1 - (30.374 + 7.901) / 45.276)|
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))|
|=||(4.463 / (4.463 + 7.901))||/||(5.63 / (5.63 + 9.743))|
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)|
|=||(29.035 / 39.911)||/||(23.525 / 37.826)|
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)|
|=||((23.224 + 13.605) / 47.066)||/||((1.495 + 15.564) / 45.276)|
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|
|=||(-22.22 - 0.062||-||-21.652)||/||47.066|
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.
Mattersight Corp has a M-score of -2.34 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
Mattersight Corp Annual Data
Mattersight Corp Quarterly Data