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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 -2.80.
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 * 0.8856||+||0.528 * 0.9926||+||0.404 * 1.0373||+||0.892 * 1.0083||+||0.115 * 1.0166|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0467||+||4.679 * -0.1264||-||0.327 * 0.9625|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $131.6 Mil.|
Revenue was 226.953 + 230.447 + 243.182 + 258.49 = $959.1 Mil.
Gross Profit was 49.354 + 47.168 + 48.535 + 51.554 = $196.6 Mil.
Total Current Assets was $183.2 Mil.
Total Assets was $413.0 Mil.
Property, Plant and Equipment(Net PPE) was $147.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.0 Mil.
Selling, General & Admin. Expense(SGA) was $151.1 Mil.
Total Current Liabilities was $80.4 Mil.
Long-Term Debt was $323.6 Mil.
Net Income was 2.16 + 2.524 + 2.624 + 3.574 = $10.9 Mil.
Non Operating Income was 2.322 + -0.566 + -0.232 + -0.097 = $1.4 Mil.
Cash Flow from Operations was 5.519 + 24.441 + 9.239 + 22.443 = $61.6 Mil.
|Accounts Receivable was $147.4 Mil.
Revenue was 255.599 + 234.487 + 225.421 + 235.671 = $951.2 Mil.
Gross Profit was 54.521 + 45.599 + 43.753 + 49.683 = $193.6 Mil.
Total Current Assets was $197.7 Mil.
Total Assets was $445.6 Mil.
Property, Plant and Equipment(Net PPE) was $162.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $23.6 Mil.
Selling, General & Admin. Expense(SGA) was $143.1 Mil.
Total Current Liabilities was $82.1 Mil.
Long-Term Debt was $370.7 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)|
|=||(131.614 / 959.072)||/||(147.394 / 951.178)|
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)|
|=||(47.168 / 951.178)||/||(49.354 / 959.072)|
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 - (183.214 + 147.596) / 412.986)||/||(1 - (197.735 + 162.428) / 445.645)|
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))|
|=||(23.597 / (23.597 + 162.428))||/||(21.043 / (21.043 + 147.596))|
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)|
|=||(151.073 / 959.072)||/||(143.141 / 951.178)|
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)|
|=||((323.553 + 80.36) / 412.986)||/||((370.717 + 82.141) / 445.645)|
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|
|=||(10.882 - 1.427||-||61.642)||/||412.986|
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 -3.15 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