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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 -3.44 suggests that the company is not a 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 -2.84.
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 * 1.0463||+||0.528 * 1.0763||+||0.404 * 0.649||+||0.892 * 1.0628||+||0.115 * 0.8825|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9525||+||4.679 * -0.1951||-||0.327 * 1.1051|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $138.5 Mil.|
Revenue was 234.487 + 225.421 + 235.671 + 239.296 = $934.9 Mil.
Gross Profit was 45.599 + 43.753 + 49.683 + 55.985 = $195.0 Mil.
Total Current Assets was $188.5 Mil.
Total Assets was $443.2 Mil.
Property, Plant and Equipment(Net PPE) was $166.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $24.9 Mil.
Selling, General & Admin. Expense(SGA) was $145.7 Mil.
Total Current Liabilities was $82.6 Mil.
Long-Term Debt was $379.9 Mil.
Net Income was 3.073 + -22.798 + 2.763 + -31.147 = $-48.1 Mil.
Non Operating Income was -0.157 + -0.089 + -0.419 + 0.271 = $-0.4 Mil.
Cash Flow from Operations was 1.408 + 6.619 + 20.903 + 9.829 = $38.8 Mil.
|Accounts Receivable was $124.5 Mil.
Revenue was 229.422 + 215.392 + 222.078 + 212.733 = $879.6 Mil.
Gross Profit was 52.997 + 49.397 + 48.796 + 46.309 = $197.5 Mil.
Total Current Assets was $168.9 Mil.
Total Assets was $510.5 Mil.
Property, Plant and Equipment(Net PPE) was $184.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $24.0 Mil.
Selling, General & Admin. Expense(SGA) was $143.9 Mil.
Total Current Liabilities was $80.4 Mil.
Long-Term Debt was $401.8 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)|
|=||(138.453 / 934.875)||/||(124.502 / 879.625)|
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)|
|=||(43.753 / 879.625)||/||(45.599 / 934.875)|
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 - (188.515 + 165.964) / 443.15)||/||(1 - (168.888 + 184.238) / 510.52)|
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))|
|=||(23.992 / (23.992 + 184.238))||/||(24.923 / (24.923 + 165.964))|
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)|
|=||(145.722 / 934.875)||/||(143.941 / 879.625)|
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)|
|=||((379.936 + 82.561) / 443.15)||/||((401.761 + 80.389) / 510.52)|
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|
|=||(-48.109 - -0.394||-||38.759)||/||443.15|
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 -3.44 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