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Quality Systems Inc (NAS:QSII)
Beneish M-Score
-3.75 (As of Today)

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 Systems Inc has a M-score of -3.75 suggests that the company is not a manipulator.

QSII' s 10-Year Beneish M-Score Range
Min: -3.75   Max: -1.16
Current: -3.75

-3.75
-1.16

During the past 13 years, the highest Beneish M-Score of Quality Systems Inc was -1.16. The lowest was -3.75. And the median was -2.49.


Definition

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 Systems 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 * 0.7379+0.528 * 1.1771+0.404 * 0.9008+0.892 * 1.036+0.115 * 0.9096
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9878+4.679 * -0.2295-0.327 * 1.1123
=-3.75

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $106.7 Mil.
Revenue was 120.519 + 117.894 + 115.203 + 108.854 = $462.5 Mil.
Gross Profit was 63.746 + 61.704 + 61.849 + 37.799 = $225.1 Mil.
Total Current Assets was $258.6 Mil.
Total Assets was $440.1 Mil.
Property, Plant and Equipment(Net PPE) was $23.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $30.7 Mil.
Selling, General & Admin. Expense(SGA) was $151.0 Mil.
Total Current Liabilities was $136.7 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 4.75 + 5.163 + 5.201 + -12.587 = $2.5 Mil.
Non Operating Income was -0.026 + 0.009 + 0.035 + 0.018 = $0.0 Mil.
Cash Flow from Operations was 24.176 + 18.565 + 33.67 + 27.069 = $103.5 Mil.
Accounts Receivable was $139.5 Mil.
Revenue was 111.081 + 109.529 + 111.295 + 114.51 = $446.4 Mil.
Gross Profit was 63.399 + 61.457 + 62.998 + 67.914 = $255.8 Mil.
Total Current Assets was $257.2 Mil.
Total Assets was $467.3 Mil.
Property, Plant and Equipment(Net PPE) was $23.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $25.3 Mil.
Selling, General & Admin. Expense(SGA) was $147.5 Mil.
Total Current Liabilities was $130.5 Mil.
Long-Term Debt was $0.0 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(106.652 / 462.47) / (139.526 / 446.415)
=0.23061388 / 0.31254774
=0.7379

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(61.704 / 446.415) / (63.746 / 462.47)
=0.57293774 / 0.48672995
=1.1771

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (258.59 + 23.193) / 440.107) / (1 - (257.183 + 23.508) / 467.331)
=0.35973979 / 0.39937432
=0.9008

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=462.47 / 446.415
=1.036

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))
=(25.263 / (25.263 + 23.508)) / (30.681 / (30.681 + 23.193))
=0.51799225 / 0.56949549
=0.9096

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)
=(150.951 / 462.47) / (147.514 / 446.415)
=0.32640171 / 0.33044141
=0.9878

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)
=((0 + 136.651) / 440.107) / ((0 + 130.457) / 467.331)
=0.31049495 / 0.27915332
=1.1123

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(2.527 - 0.036 - 103.48) / 440.107
=-0.2295

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 Systems Inc has a M-score of -3.75 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Quality Systems Inc Annual Data

Mar05Mar06Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14
DSRI 1.30810.99841.08661.00930.89341.00381.07410.85730.950.7692
GMI 0.94150.94990.98411.0181.04221.02850.97030.98621.10251.1645
AQI 0.86991.0591.00582.1071.33541.12120.84091.12821.1211.3014
SGI 1.25411.34091.31751.18671.31641.18861.21091.21641.07070.9662
DEPI 1.02411.0350.99690.8791.00550.99981.06811.0720.9560.9409
SGAI 1.0141.07020.96780.990.991.0541.02870.9781.07541.041
LVGI 1.25811.1210.98210.99690.880.9931.1050.81460.97540.9709
TATA -0.0643-0.07740.0024-0.0238-0.0096-0.0229-0.0232-0.0052-0.057-0.198
M-score -2.44-2.59-2.10-1.97-2.14-2.36-2.44-2.33-2.64-3.44

Quality Systems Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.85240.87940.86660.950.89930.93930.86620.76920.80210.7379
GMI 1.02511.0651.09911.10251.08871.07571.17141.16451.17041.1771
AQI 1.24431.24591.25261.1211.0511.39691.17521.30141.26930.9008
SGI 1.20711.14891.09571.07071.00840.97860.96250.96621.00351.036
DEPI 1.07451.0070.97180.9560.92310.99560.98110.94090.93810.9096
SGAI 1.01191.03891.06221.07541.0691.0631.07211.0411.02420.9878
LVGI 0.90260.91530.76910.97540.94490.99351.20350.97091.00731.1123
TATA -0.0086-0.00690.0015-0.057-0.0886-0.1003-0.1944-0.198-0.1883-0.2295
M-score -2.32-2.33-2.29-2.64-2.91-2.83-3.47-3.44-3.35-3.75
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