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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 -2.52.
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 * 0.734||+||0.528 * 1.0474||+||0.404 * 1.0995||+||0.892 * 1.0256||+||0.115 * 1.0279|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8882||+||4.679 * -0.0064||-||0.327 * 1.0998|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $489 Mil.|
Revenue was 604.2 + 585.2 + 605.125 + 576.415 = $2,371 Mil.
Gross Profit was 186 + 168.9 + 162.924 + 164.079 = $682 Mil.
Total Current Assets was $1,056 Mil.
Total Assets was $1,846 Mil.
Property, Plant and Equipment(Net PPE) was $248 Mil.
Depreciation, Depletion and Amortization(DDA) was $91 Mil.
Selling, General & Admin. Expense(SGA) was $362 Mil.
Total Current Liabilities was $729 Mil.
Long-Term Debt was $458 Mil.
Net Income was 39.4 + 24.9 + 34.178 + 37.741 = $136 Mil.
Non Operating Income was -0.1 + 1.8 + -0.207 + 1.314 = $3 Mil.
Cash Flow from Operations was 31.5 + 54.2 + 59.241 + 0.202 = $145 Mil.
|Accounts Receivable was $649 Mil.
Revenue was 575 + 573.7 + 585.124 + 577.918 = $2,312 Mil.
Gross Profit was 172 + 172.9 + 182.267 + 169.226 = $696 Mil.
Total Current Assets was $1,081 Mil.
Total Assets was $1,769 Mil.
Property, Plant and Equipment(Net PPE) was $215 Mil.
Depreciation, Depletion and Amortization(DDA) was $82 Mil.
Selling, General & Admin. Expense(SGA) was $397 Mil.
Total Current Liabilities was $690 Mil.
Long-Term Debt was $344 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)|
|=||(488.8 / 2370.94)||/||(649.288 / 2311.742)|
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)|
|=||(168.9 / 2311.742)||/||(186 / 2370.94)|
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 - (1055.6 + 248.2) / 1845.5)||/||(1 - (1081.471 + 215.421) / 1769.228)|
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))|
|=||(82.424 / (82.424 + 215.421))||/||(91.439 / (91.439 + 248.2))|
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)|
|=||(361.784 / 2370.94)||/||(397.16 / 2311.742)|
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)|
|=||((457.9 + 728.8) / 1845.5)||/||((344.387 + 690.052) / 1769.228)|
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|
|=||(136.219 - 2.807||-||145.143)||/||1845.5|
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 -2.68 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