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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 -2.38.
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 * 0.5489||+||0.528 * 0.9242||+||0.404 * 3.8971||+||0.892 * 1.0734||+||0.115 * 0.2576|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0352||+||4.679 * -0.023||-||0.327 * 0.3346|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $435 Mil.|
Revenue was 575.045 + 573.689 + 585.124 + 577.918 = $2,312 Mil.
Gross Profit was 171.948 + 172.877 + 182.267 + 169.226 = $696 Mil.
Total Current Assets was $0 Mil.
Total Assets was $1,769 Mil.
Property, Plant and Equipment(Net PPE) was $0 Mil.
Depreciation, Depletion and Amortization(DDA) was $82 Mil.
Selling, General & Admin. Expense(SGA) was $397 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $348 Mil.
Net Income was 38.76 + 37.142 + 40.072 + 34.739 = $151 Mil.
Non Operating Income was 1.067 + 1.641 + -2.601 + -2.364 = $-2 Mil.
Cash Flow from Operations was 0 + 18.884 + 98.502 + 76.362 = $194 Mil.
|Accounts Receivable was $738 Mil.
Revenue was 574.236 + 529.064 + 526.858 + 523.451 = $2,154 Mil.
Gross Profit was 162.638 + 146.051 + 148.238 + 142.576 = $600 Mil.
Total Current Assets was $1,167 Mil.
Total Assets was $1,878 Mil.
Property, Plant and Equipment(Net PPE) was $229 Mil.
Depreciation, Depletion and Amortization(DDA) was $80 Mil.
Selling, General & Admin. Expense(SGA) was $357 Mil.
Total Current Liabilities was $733 Mil.
Long-Term Debt was $369 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)|
|=||(434.996 / 2311.776)||/||(738.318 / 2153.609)|
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)|
|=||(172.877 / 2153.609)||/||(171.948 / 2311.776)|
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 - (0 + 0) / 1769.228)||/||(1 - (1166.776 + 229.169) / 1877.789)|
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))|
|=||(79.506 / (79.506 + 229.169))||/||(82.377 / (82.377 + 0))|
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)|
|=||(397.068 / 2311.776)||/||(357.309 / 2153.609)|
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)|
|=||((347.5 + 0) / 1769.228)||/||((369.054 + 733.315) / 1877.789)|
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|
|=||(150.713 - -2.257||-||193.748)||/||1769.228|
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 -1.68 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
Parexel International Corp Annual Data
Parexel International Corp Quarterly Data