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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 8 years, the highest Beneish M-Score of Higher One Holdings Inc was -1.41. The lowest was -3.23. And the median was -2.64.
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 * 0.7447||+||0.528 * 1.4524||+||0.404 * 0.8258||+||0.892 * 0.7377||+||0.115 * 0.8886|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.448||+||4.679 * 0.1651||-||0.327 * 0.7241|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $6.6 Mil.|
Revenue was 55.551 + 12.369 + 34.482 + 45.589 = $148.0 Mil.
Gross Profit was 29.62 + -9.686 + 6.665 + 24.117 = $50.7 Mil.
Total Current Assets was $54.4 Mil.
Total Assets was $194.2 Mil.
Property, Plant and Equipment(Net PPE) was $40.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.0 Mil.
Selling, General & Admin. Expense(SGA) was $83.0 Mil.
Total Current Liabilities was $37.4 Mil.
Long-Term Debt was $37.5 Mil.
Net Income was 3.749 + 16.651 + -12.655 + 0.003 = $7.7 Mil.
Non Operating Income was 0.077 + 0.078 + 0.077 + 1.203 = $1.4 Mil.
Cash Flow from Operations was 9.033 + -51.549 + 13.275 + 3.491 = $-25.8 Mil.
|Accounts Receivable was $12.0 Mil.
Revenue was 61.508 + 42.605 + 59.775 + 36.727 = $200.6 Mil.
Gross Profit was 33.761 + 18.876 + 31.593 + 15.625 = $99.9 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 $77.7 Mil.
Total Current Liabilities was $55.6 Mil.
Long-Term Debt was $67.8 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)|
|=||(6.61 / 147.991)||/||(12.033 / 200.615)|
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)|
|=||(-9.686 / 200.615)||/||(29.62 / 147.991)|
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 - (54.366 + 40.512) / 194.174)||/||(1 - (42.842 + 45.394) / 231.742)|
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))|
|=||(19.787 / (19.787 + 45.394))||/||(21.021 / (21.021 + 40.512))|
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)|
|=||(83.031 / 147.991)||/||(77.731 / 200.615)|
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)|
|=||((37.483 + 37.409) / 194.174)||/||((67.794 + 55.648) / 231.742)|
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|
|=||(7.748 - 1.435||-||-25.75)||/||194.174|
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 -2.01 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
Higher One Holdings Inc Annual Data
Higher One Holdings Inc Quarterly Data