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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 -6.17. And the median was -3.41.
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 * 1.6324||+||0.528 * 0.9877||+||0.404 * 0.8309||+||0.892 * 0.879||+||0.115 * 1.0088|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1393||+||4.679 * -0.2236||-||0.327 * 1.0537|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $3.30 Mil.|
Revenue was 8.286 + 7.68 + 7.34 + 7.013 = $30.32 Mil.
Gross Profit was 5.78 + 5.281 + 5.031 + 4.78 = $20.87 Mil.
Total Current Assets was $22.38 Mil.
Total Assets was $32.08 Mil.
Property, Plant and Equipment(Net PPE) was $4.66 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.13 Mil.
Selling, General & Admin. Expense(SGA) was $30.74 Mil.
Total Current Liabilities was $15.47 Mil.
Long-Term Debt was $1.18 Mil.
Net Income was -2.807 + -4.182 + -3.28 + -3.963 = $-14.23 Mil.
Non Operating Income was -0.033 + -0.005 + 0.284 + -0.37 = $-0.12 Mil.
Cash Flow from Operations was -3.393 + 2.033 + -1.351 + -4.223 = $-6.93 Mil.
|Accounts Receivable was $2.30 Mil.
Revenue was 9.267 + 8.665 + 7.964 + 8.598 = $34.49 Mil.
Gross Profit was 6.89 + 5.725 + 5.203 + 5.637 = $23.46 Mil.
Total Current Assets was $19.78 Mil.
Total Assets was $30.75 Mil.
Property, Plant and Equipment(Net PPE) was $5.16 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.52 Mil.
Selling, General & Admin. Expense(SGA) was $30.70 Mil.
Total Current Liabilities was $13.91 Mil.
Long-Term Debt was $1.23 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)|
|=||(3.3 / 30.319)||/||(2.3 / 34.494)|
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)|
|=||(5.281 / 34.494)||/||(5.78 / 30.319)|
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 - (22.383 + 4.657) / 32.078)||/||(1 - (19.779 + 5.158) / 30.749)|
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))|
|=||(3.516 / (3.516 + 5.158))||/||(3.128 / (3.128 + 4.657))|
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)|
|=||(30.739 / 30.319)||/||(30.696 / 34.494)|
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)|
|=||((1.176 + 15.469) / 32.078)||/||((1.233 + 13.909) / 30.749)|
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|
|=||(-14.232 - -0.124||-||-6.934)||/||32.078|
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 -3.17 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