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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 * 1.2821||+||0.528 * 0.973||+||0.404 * 0.623||+||0.892 * 1.2461||+||0.115 * 1.0466|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0978||+||4.679 * -0.2011||-||0.327 * 0.9712|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $7.11 Mil.|
Revenue was 10.053 + 10.372 + 10.482 + 9.742 = $40.65 Mil.
Gross Profit was 6.807 + 7.479 + 7.943 + 7.073 = $29.30 Mil.
Total Current Assets was $36.88 Mil.
Total Assets was $52.21 Mil.
Property, Plant and Equipment(Net PPE) was $8.77 Mil.
Depreciation, Depletion and Amortization(DDA) was $5.35 Mil.
Selling, General & Admin. Expense(SGA) was $27.22 Mil.
Total Current Liabilities was $23.80 Mil.
Long-Term Debt was $7.88 Mil.
Net Income was -5.821 + -4.361 + -3.939 + -3.564 = $-17.69 Mil.
Non Operating Income was 0 + 0 + -0.022 + 0.02 = $-0.00 Mil.
Cash Flow from Operations was -5.373 + -3.564 + 2.863 + -1.111 = $-7.19 Mil.
|Accounts Receivable was $4.45 Mil.
Revenue was 9.316 + 8.286 + 7.68 + 7.34 = $32.62 Mil.
Gross Profit was 6.741 + 5.78 + 5.281 + 5.078 = $22.88 Mil.
Total Current Assets was $24.95 Mil.
Total Assets was $37.69 Mil.
Property, Plant and Equipment(Net PPE) was $5.15 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.38 Mil.
Selling, General & Admin. Expense(SGA) was $19.90 Mil.
Total Current Liabilities was $22.24 Mil.
Long-Term Debt was $1.31 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)|
|=||(7.109 / 40.649)||/||(4.45 / 32.622)|
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)|
|=||(22.88 / 32.622)||/||(29.302 / 40.649)|
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 - (36.88 + 8.773) / 52.212)||/||(1 - (24.945 + 5.148) / 37.694)|
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))|
|=||(3.38 / (3.38 + 5.148))||/||(5.347 / (5.347 + 8.773))|
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)|
|=||(27.218 / 40.649)||/||(19.898 / 32.622)|
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)|
|=||((7.881 + 23.799) / 52.212)||/||((1.307 + 22.242) / 37.694)|
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|
|=||(-17.685 - -0.002||-||-7.185)||/||52.212|
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 -3.11 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