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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 Parexel International Corp was -0.65. The lowest was -3.47. And the median was -2.51.
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 Parexel International Corp 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 * 0.5868||+||0.528 * 1.0423||+||0.404 * 1.1858||+||0.892 * 1.0133||+||0.115 * 1.0167|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9099||+||4.679 * -0.0352||-||0.327 * 1.077|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $428 Mil.|
Revenue was 585.2 + 605.125 + 576.415 + 575 = $2,342 Mil.
Gross Profit was 168.9 + 162.924 + 164.079 + 172 = $668 Mil.
Total Current Assets was $1,005 Mil.
Total Assets was $1,800 Mil.
Property, Plant and Equipment(Net PPE) was $245 Mil.
Depreciation, Depletion and Amortization(DDA) was $88 Mil.
Selling, General & Admin. Expense(SGA) was $363 Mil.
Total Current Liabilities was $704 Mil.
Long-Term Debt was $470 Mil.
Net Income was 24.9 + 34.178 + 37.741 + 38.8 = $136 Mil.
Non Operating Income was 1.8 + -0.207 + 1.314 + 3 = $6 Mil.
Cash Flow from Operations was 54.2 + 59.241 + 0.202 + 79.5 = $193 Mil.
|Accounts Receivable was $720 Mil.
Revenue was 573.7 + 585.124 + 577.918 + 574.236 = $2,311 Mil.
Gross Profit was 172.9 + 182.267 + 169.226 + 162.638 = $687 Mil.
Total Current Assets was $1,126 Mil.
Total Assets was $1,819 Mil.
Property, Plant and Equipment(Net PPE) was $224 Mil.
Depreciation, Depletion and Amortization(DDA) was $82 Mil.
Selling, General & Admin. Expense(SGA) was $394 Mil.
Total Current Liabilities was $734 Mil.
Long-Term Debt was $367 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)|
|=||(428.1 / 2341.74)||/||(719.974 / 2310.978)|
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)|
|=||(162.924 / 2310.978)||/||(168.9 / 2341.74)|
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 - (1005.2 + 245.3) / 1800.1)||/||(1 - (1126.21 + 224.154) / 1818.601)|
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))|
|=||(82.47 / (82.47 + 224.154))||/||(88.239 / (88.239 + 245.3))|
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)|
|=||(363.184 / 2341.74)||/||(393.888 / 2310.978)|
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)|
|=||((470.2 + 703.5) / 1800.1)||/||((367.139 + 733.875) / 1818.601)|
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|
|=||(135.619 - 5.907||-||193.143)||/||1800.1|
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.
Parexel International Corp has a M-score of -2.92 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
Parexel International Corp Annual Data
Parexel International Corp Quarterly Data