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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 -2.74.
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 * 1.1379||+||0.528 * 1||+||0.404 * 0.8618||+||0.892 * 1.1722||+||0.115 * 0.9099|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9048||+||4.679 * -0.0589||-||0.327 * 1.0204|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $49.3 Mil.|
Revenue was 74.192 + 75.491 + 76.771 + 70.167 = $296.6 Mil.
Gross Profit was 74.192 + 75.491 + 76.771 + 70.167 = $296.6 Mil.
Total Current Assets was $305.2 Mil.
Total Assets was $416.3 Mil.
Property, Plant and Equipment(Net PPE) was $31.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.3 Mil.
Selling, General & Admin. Expense(SGA) was $133.9 Mil.
Total Current Liabilities was $42.9 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 22.715 + 24.238 + 24.593 + 21.636 = $93.2 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 35.743 + 30.561 + 10.034 + 41.363 = $117.7 Mil.
|Accounts Receivable was $36.9 Mil.
Revenue was 64.245 + 64.964 + 63.398 + 60.442 = $253.0 Mil.
Gross Profit was 64.245 + 64.964 + 63.398 + 60.442 = $253.0 Mil.
Total Current Assets was $249.1 Mil.
Total Assets was $362.9 Mil.
Property, Plant and Equipment(Net PPE) was $32.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $16.7 Mil.
Selling, General & Admin. Expense(SGA) was $126.3 Mil.
Total Current Liabilities was $36.6 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)|
|=||(49.28 / 296.621)||/||(36.947 / 253.049)|
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)|
|=||(75.491 / 253.049)||/||(74.192 / 296.621)|
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 - (305.172 + 31.027) / 416.322)||/||(1 - (249.068 + 32.8) / 362.909)|
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))|
|=||(16.7 / (16.7 + 32.8))||/||(18.282 / (18.282 + 31.027))|
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)|
|=||(133.936 / 296.621)||/||(126.277 / 253.049)|
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 + 42.851) / 416.322)||/||((0 + 36.606) / 362.909)|
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|
|=||(93.182 - 0||-||117.701)||/||416.322|
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 -2.53 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