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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 7 years, the highest Beneish M-Score of Higher One Holdings Inc was 0.87. The lowest was -2.77. And the median was -2.55.
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 Higher One 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 * 0.9791||+||0.528 * 1.0831||+||0.404 * 0.8666||+||0.892 * 1.0426||+||0.115 * 0.7824|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0578||+||4.679 * -0.0619||-||0.327 * 0.9183|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $8.9 Mil.|
Revenue was 57.053 + 59.775 + 36.727 + 66.556 = $220.1 Mil.
Gross Profit was 31.542 + 31.593 + 15.625 + 38.962 = $117.7 Mil.
Total Current Assets was $69.8 Mil.
Total Assets was $257.3 Mil.
Property, Plant and Equipment(Net PPE) was $46.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $19.1 Mil.
Selling, General & Admin. Expense(SGA) was $83.4 Mil.
Total Current Liabilities was $54.4 Mil.
Long-Term Debt was $102.9 Mil.
Net Income was 4.112 + 4.916 + -3.771 + 9.71 = $15.0 Mil.
Non Operating Income was -0.883 + -0.198 + 1.681 + 0.078 = $0.7 Mil.
Cash Flow from Operations was 9.307 + 12.68 + 9.633 + -1.41 = $30.2 Mil.
|Accounts Receivable was $8.7 Mil.
Revenue was 56.608 + 57.112 + 40.023 + 57.38 = $211.1 Mil.
Gross Profit was 32.977 + 32.113 + 22.129 + 35.08 = $122.3 Mil.
Total Current Assets was $35.8 Mil.
Total Assets was $232.4 Mil.
Property, Plant and Equipment(Net PPE) was $49.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.6 Mil.
Selling, General & Admin. Expense(SGA) was $75.6 Mil.
Total Current Liabilities was $56.5 Mil.
Long-Term Debt was $98.2 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)|
|=||(8.929 / 220.111)||/||(8.747 / 211.123)|
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)|
|=||(31.593 / 211.123)||/||(31.542 / 220.111)|
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 - (69.777 + 46.768) / 257.271)||/||(1 - (35.812 + 49.888) / 232.383)|
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))|
|=||(14.62 / (14.62 + 49.888))||/||(19.072 / (19.072 + 46.768))|
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)|
|=||(83.39 / 220.111)||/||(75.613 / 211.123)|
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)|
|=||((102.871 + 54.385) / 257.271)||/||((98.181 + 56.501) / 232.383)|
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|
|=||(14.967 - 0.678||-||30.21)||/||257.271|
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.
Higher One Holdings Inc has a M-score of -2.77 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
Higher One Holdings Inc Annual Data
Higher One Holdings Inc Quarterly Data