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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 Quality Distribution Inc was -1.72. The lowest was -7.19. And the median was -2.77.
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 Quality Distribution 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 * 1.0634||+||0.528 * 1.1553||+||0.404 * 0.7046||+||0.892 * 1.0589||+||0.115 * 1.0895|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8999||+||4.679 * -0.0918||-||0.327 * 1.0059|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $146.5 Mil.|
Revenue was 258.49 + 255.599 + 234.487 + 225.421 = $974.0 Mil.
Gross Profit was 51.554 + 49.808 + 45.599 + 43.753 = $190.7 Mil.
Total Current Assets was $201.1 Mil.
Total Assets was $439.6 Mil.
Property, Plant and Equipment(Net PPE) was $160.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $22.6 Mil.
Selling, General & Admin. Expense(SGA) was $144.3 Mil.
Total Current Liabilities was $95.9 Mil.
Long-Term Debt was $347.0 Mil.
Net Income was 3.574 + 11.369 + 3.073 + -22.798 = $-4.8 Mil.
Non Operating Income was -0.097 + 4.371 + -0.157 + -0.089 = $4.0 Mil.
Cash Flow from Operations was 22.443 + 1.08 + 1.408 + 6.619 = $31.6 Mil.
|Accounts Receivable was $130.1 Mil.
Revenue was 235.671 + 239.296 + 229.422 + 215.392 = $919.8 Mil.
Gross Profit was 49.683 + 55.985 + 52.997 + 49.397 = $208.1 Mil.
Total Current Assets was $177.9 Mil.
Total Assets was $465.1 Mil.
Property, Plant and Equipment(Net PPE) was $170.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $26.4 Mil.
Selling, General & Admin. Expense(SGA) was $151.4 Mil.
Total Current Liabilities was $85.6 Mil.
Long-Term Debt was $380.2 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)|
|=||(146.501 / 973.997)||/||(130.099 / 919.781)|
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)|
|=||(49.808 / 919.781)||/||(51.554 / 973.997)|
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 - (201.116 + 160.539) / 439.633)||/||(1 - (177.897 + 170.083) / 465.052)|
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))|
|=||(26.378 / (26.378 + 170.083))||/||(22.566 / (22.566 + 160.539))|
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)|
|=||(144.31 / 973.997)||/||(151.441 / 919.781)|
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)|
|=||((347.039 + 95.893) / 439.633)||/||((380.195 + 85.582) / 465.052)|
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|
|=||(-4.782 - 4.028||-||31.55)||/||439.633|
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.
Quality Distribution Inc has a M-score of -2.81 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
Quality Distribution Inc Annual Data
Quality Distribution Inc Quarterly Data