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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 -3.23. And the median was -2.84.
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 * 1.0261||+||0.528 * 1||+||0.404 * 0.816||+||0.892 * 1.2205||+||0.115 * 1.029|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9622||+||4.679 * 0.0869||-||0.327 * 1.0328|
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $50.7 Mil.|
Revenue was 94.436 + 90.271 + 96.639 + 88.573 = $369.9 Mil.
Gross Profit was 94.436 + 90.271 + 96.639 + 88.573 = $369.9 Mil.
Total Current Assets was $424.9 Mil.
Total Assets was $528.0 Mil.
Property, Plant and Equipment(Net PPE) was $31.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.8 Mil.
Selling, General & Admin. Expense(SGA) was $160.5 Mil.
Total Current Liabilities was $60.0 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 33.165 + 30.918 + 33.126 + 28.963 = $126.2 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 56.315 + 52.643 + 28.714 + -57.383 = $80.3 Mil.
|Accounts Receivable was $40.5 Mil.
Revenue was 76.644 + 74.192 + 75.491 + 76.771 = $303.1 Mil.
Gross Profit was 76.644 + 74.192 + 75.491 + 76.771 = $303.1 Mil.
Total Current Assets was $334.8 Mil.
Total Assets was $439.0 Mil.
Property, Plant and Equipment(Net PPE) was $30.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.5 Mil.
Selling, General & Admin. Expense(SGA) was $136.7 Mil.
Total Current Liabilities was $48.3 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)|
|=||(50.668 / 369.919)||/||(40.459 / 303.098)|
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)|
|=||(303.098 / 303.098)||/||(369.919 / 369.919)|
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 - (424.933 + 31.104) / 528.042)||/||(1 - (334.773 + 30.897) / 439.041)|
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))|
|=||(18.542 / (18.542 + 30.897))||/||(17.838 / (17.838 + 31.104))|
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)|
|=||(160.479 / 369.919)||/||(136.656 / 303.098)|
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 + 60.029) / 528.042)||/||((0 + 48.328) / 439.041)|
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|
|=||(126.172 - 0||-||80.289)||/||528.042|
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 -1.93 signals that the company is likely to 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