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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 -3.23. And the median was -2.63.
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 * 1.1502||+||0.528 * 1.009||+||0.404 * 1.0078||+||0.892 * 1.0504||+||0.115 * 0.7972|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0128||+||4.679 * -0.1107||-||0.327 * 0.8271|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $16.9 Mil.|
Revenue was 45.589 + 65.518 + 57.053 + 59.775 = $227.9 Mil.
Gross Profit was 24.117 + 37.328 + 31.542 + 31.593 = $124.6 Mil.
Total Current Assets was $49.4 Mil.
Total Assets was $234.5 Mil.
Property, Plant and Equipment(Net PPE) was $44.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.1 Mil.
Selling, General & Admin. Expense(SGA) was $87.2 Mil.
Total Current Liabilities was $57.9 Mil.
Long-Term Debt was $67.7 Mil.
Net Income was 0.003 + 6.86 + 4.112 + 4.916 = $15.9 Mil.
Non Operating Income was 1.203 + 0.077 + -0.883 + -0.198 = $0.2 Mil.
Cash Flow from Operations was 3.491 + 16.169 + 9.307 + 12.68 = $41.6 Mil.
|Accounts Receivable was $14.0 Mil.
Revenue was 36.727 + 66.556 + 56.608 + 57.112 = $217.0 Mil.
Gross Profit was 15.625 + 38.962 + 32.977 + 32.113 = $119.7 Mil.
Total Current Assets was $49.8 Mil.
Total Assets was $244.3 Mil.
Property, Plant and Equipment(Net PPE) was $48.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $16.9 Mil.
Selling, General & Admin. Expense(SGA) was $82.0 Mil.
Total Current Liabilities was $55.2 Mil.
Long-Term Debt was $103.0 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)|
|=||(16.881 / 227.935)||/||(13.973 / 217.003)|
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)|
|=||(37.328 / 217.003)||/||(24.117 / 227.935)|
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 - (49.368 + 44.04) / 234.527)||/||(1 - (49.755 + 48.675) / 244.277)|
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))|
|=||(16.909 / (16.909 + 48.675))||/||(21.051 / (21.051 + 44.04))|
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)|
|=||(87.246 / 227.935)||/||(82.014 / 217.003)|
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)|
|=||((67.716 + 57.913) / 234.527)||/||((103.026 + 55.174) / 244.277)|
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|
|=||(15.891 - 0.199||-||41.647)||/||234.527|
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 -2.78 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