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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 -3.04.
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 * 0.8999||+||0.528 * 1||+||0.404 * 0.7142||+||0.892 * 1.1007||+||0.115 * 0.8135|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9823||+||4.679 * -0.0925||-||0.327 * 0.9772|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $33.8 Mil.|
Revenue was 70.167 + 64.245 + 64.964 + 63.398 = $262.8 Mil.
Gross Profit was 70.167 + 64.245 + 64.964 + 63.398 = $262.8 Mil.
Total Current Assets was $238.8 Mil.
Total Assets was $379.9 Mil.
Property, Plant and Equipment(Net PPE) was $32.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.4 Mil.
Selling, General & Admin. Expense(SGA) was $126.9 Mil.
Total Current Liabilities was $45.7 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 21.636 + 17.504 + 18.191 + 17.475 = $74.8 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 41.363 + 32.177 + 26.265 + 10.147 = $110.0 Mil.
|Accounts Receivable was $34.2 Mil.
Revenue was 60.442 + 61.133 + 63.507 + 53.651 = $238.7 Mil.
Gross Profit was 60.442 + 61.133 + 63.507 + 53.651 = $238.7 Mil.
Total Current Assets was $179.2 Mil.
Total Assets was $353.9 Mil.
Property, Plant and Equipment(Net PPE) was $32.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $13.1 Mil.
Selling, General & Admin. Expense(SGA) was $117.3 Mil.
Total Current Liabilities was $43.5 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)|
|=||(33.836 / 262.774)||/||(34.158 / 238.733)|
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)|
|=||(64.245 / 238.733)||/||(70.167 / 262.774)|
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 - (238.822 + 32.185) / 379.884)||/||(1 - (179.181 + 32.703) / 353.91)|
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))|
|=||(13.051 / (13.051 + 32.703))||/||(17.379 / (17.379 + 32.185))|
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)|
|=||(126.859 / 262.774)||/||(117.33 / 238.733)|
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 + 45.676) / 379.884)||/||((0 + 43.548) / 353.91)|
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|
|=||(74.806 - 0||-||109.952)||/||379.884|
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 -3.04 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