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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.
Quality Distribution, Inc. has a M-score of -3.66 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Quality Distribution, Inc. was -1.76. The lowest was -6.54. 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 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 * 0.9616||+||0.528 * 1.0106||+||0.404 * 0.6545||+||0.892 * 1.1041||+||0.115 * 0.7494|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0261||+||4.679 * -0.2218||-||0.327 * 1.104|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $120.9 Mil.|
Revenue was 225.421 + 235.671 + 239.296 + 229.422 = $929.8 Mil.
Gross Profit was 43.753 + 49.683 + 55.985 + 52.997 = $202.4 Mil.
Total Current Assets was $166.9 Mil.
Total Assets was $427.2 Mil.
Property, Plant and Equipment(Net PPE) was $170.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $26.1 Mil.
Selling, General & Admin. Expense(SGA) was $149.4 Mil.
Total Current Liabilities was $78.2 Mil.
Long-Term Debt was $372.7 Mil.
Net Income was -22.798 + 2.763 + -31.147 + 9.144 = $-42.0 Mil.
Non Operating Income was -0.089 + -0.419 + 0.271 + 6.972 = $6.7 Mil.
Cash Flow from Operations was 6.619 + 20.903 + 9.829 + 8.619 = $46.0 Mil.
|Accounts Receivable was $113.9 Mil.
Revenue was 215.392 + 222.078 + 212.733 + 191.915 = $842.1 Mil.
Gross Profit was 49.397 + 48.796 + 46.309 + 40.768 = $185.3 Mil.
Total Current Assets was $157.6 Mil.
Total Assets was $513.6 Mil.
Property, Plant and Equipment(Net PPE) was $190.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.1 Mil.
Selling, General & Admin. Expense(SGA) was $131.9 Mil.
Total Current Liabilities was $80.0 Mil.
Long-Term Debt was $411.0 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)|
|=||(120.932 / 929.81)||/||(113.906 / 842.118)|
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)|
|=||(49.683 / 842.118)||/||(43.753 / 929.81)|
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 - (166.918 + 170.114) / 427.249)||/||(1 - (157.564 + 190.342) / 513.603)|
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))|
|=||(21.09 / (21.09 + 190.342))||/||(26.121 / (26.121 + 170.114))|
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)|
|=||(149.384 / 929.81)||/||(131.855 / 842.118)|
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)|
|=||((372.725 + 78.156) / 427.249)||/||((410.975 + 79.994) / 513.603)|
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|
|=||(-42.038 - 6.735||-||45.97)||/||427.249|
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 -3.66 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