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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 * 1.1004||+||0.528 * 1.0809||+||0.404 * 0.9827||+||0.892 * 0.9944||+||0.115 * 0.805|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0872||+||4.679 * -0.1569||-||0.327 * 0.8608|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $12.0 Mil.|
Revenue was 65.518 + 57.053 + 59.775 + 36.727 = $219.1 Mil.
Gross Profit was 37.328 + 31.542 + 31.593 + 15.625 = $116.1 Mil.
Total Current Assets was $42.8 Mil.
Total Assets was $231.7 Mil.
Property, Plant and Equipment(Net PPE) was $45.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $19.8 Mil.
Selling, General & Admin. Expense(SGA) was $86.0 Mil.
Total Current Liabilities was $55.6 Mil.
Long-Term Debt was $67.8 Mil.
Net Income was 6.86 + 4.112 + 4.916 + -3.771 = $12.1 Mil.
Non Operating Income was 0.077 + -0.883 + -0.198 + 1.681 = $0.7 Mil.
Cash Flow from Operations was 16.169 + 9.307 + 12.68 + 9.633 = $47.8 Mil.
|Accounts Receivable was $11.0 Mil.
Revenue was 66.556 + 56.608 + 57.112 + 40.023 = $220.3 Mil.
Gross Profit was 38.962 + 32.977 + 32.113 + 22.129 = $126.2 Mil.
Total Current Assets was $36.6 Mil.
Total Assets was $232.5 Mil.
Property, Plant and Equipment(Net PPE) was $49.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $16.0 Mil.
Selling, General & Admin. Expense(SGA) was $79.5 Mil.
Total Current Liabilities was $40.8 Mil.
Long-Term Debt was $103.1 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)|
|=||(12.033 / 219.073)||/||(10.996 / 220.299)|
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)|
|=||(31.542 / 220.299)||/||(37.328 / 219.073)|
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 - (42.842 + 45.394) / 231.742)||/||(1 - (36.624 + 49.359) / 232.484)|
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))|
|=||(15.964 / (15.964 + 49.359))||/||(19.787 / (19.787 + 45.394))|
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)|
|=||(85.951 / 219.073)||/||(79.502 / 220.299)|
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)|
|=||((67.794 + 55.648) / 231.742)||/||((103.103 + 40.759) / 232.484)|
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|
|=||(12.117 - 0.677||-||47.789)||/||231.742|
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 -3.08 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