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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 MarketAxess Holdings Inc was -1.64. The lowest was -3.31. And the median was -2.77.
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 MarketAxess Holdings Inc 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 * 1.0007||+||0.528 * 1||+||0.404 * 0.9094||+||0.892 * 1.147||+||0.115 * 0.8574|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9076||+||4.679 * -0.0656||-||0.327 * 1.0359|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $46.9 Mil.|
Revenue was 75.491 + 76.771 + 70.167 + 64.245 = $286.7 Mil.
Gross Profit was 75.491 + 76.771 + 70.167 + 64.245 = $286.7 Mil.
Total Current Assets was $283.7 Mil.
Total Assets was $398.9 Mil.
Property, Plant and Equipment(Net PPE) was $31.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.1 Mil.
Selling, General & Admin. Expense(SGA) was $131.2 Mil.
Total Current Liabilities was $39.1 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 24.238 + 24.593 + 21.636 + 17.504 = $88.0 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 30.561 + 10.034 + 41.363 + 32.177 = $114.1 Mil.
|Accounts Receivable was $40.9 Mil.
Revenue was 64.964 + 63.398 + 60.442 + 61.133 = $249.9 Mil.
Gross Profit was 64.964 + 63.398 + 60.442 + 61.133 = $249.9 Mil.
Total Current Assets was $239.8 Mil.
Total Assets was $356.7 Mil.
Property, Plant and Equipment(Net PPE) was $34.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $15.8 Mil.
Selling, General & Admin. Expense(SGA) was $126.1 Mil.
Total Current Liabilities was $33.7 Mil.
Long-Term Debt was $0.0 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)|
|=||(46.938 / 286.674)||/||(40.896 / 249.937)|
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)|
|=||(76.771 / 249.937)||/||(75.491 / 286.674)|
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 - (283.718 + 31.29) / 398.946)||/||(1 - (239.792 + 34.396) / 356.719)|
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))|
|=||(15.777 / (15.777 + 34.396))||/||(18.122 / (18.122 + 31.29))|
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)|
|=||(131.234 / 286.674)||/||(126.067 / 249.937)|
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)|
|=||((0 + 39.089) / 398.946)||/||((0 + 33.74) / 356.719)|
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|
|=||(87.971 - 0||-||114.135)||/||398.946|
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.
MarketAxess Holdings Inc has a M-score of -2.70 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
MarketAxess Holdings Inc Annual Data
MarketAxess Holdings Inc Quarterly Data