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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 Systems Inc was -1.16. The lowest was -3.75. And the median was -2.49.
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 * 0.7746||+||0.528 * 0.9527||+||0.404 * 1.0059||+||0.892 * 1.0823||+||0.115 * 0.9247|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9657||+||4.679 * -0.1582||-||0.327 * 1.0922|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $105.9 Mil.|
Revenue was 123.424 + 120.519 + 117.894 + 115.203 = $477.0 Mil.
Gross Profit was 69.064 + 63.746 + 61.704 + 61.849 = $256.4 Mil.
Total Current Assets was $261.0 Mil.
Total Assets was $439.3 Mil.
Property, Plant and Equipment(Net PPE) was $21.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $29.5 Mil.
Selling, General & Admin. Expense(SGA) was $155.6 Mil.
Total Current Liabilities was $138.9 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 6.676 + 4.75 + 5.163 + 5.201 = $21.8 Mil.
Non Operating Income was 0 + -0.026 + 0.009 + 0.035 = $0.0 Mil.
Cash Flow from Operations was 15.965 + 24.176 + 18.565 + 32.569 = $91.3 Mil.
|Accounts Receivable was $126.3 Mil.
Revenue was 108.854 + 111.081 + 109.529 + 111.295 = $440.8 Mil.
Gross Profit was 37.799 + 63.399 + 61.457 + 62.998 = $225.7 Mil.
Total Current Assets was $264.8 Mil.
Total Assets was $447.8 Mil.
Property, Plant and Equipment(Net PPE) was $24.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $27.7 Mil.
Selling, General & Admin. Expense(SGA) was $148.8 Mil.
Total Current Liabilities was $129.6 Mil.
Long-Term Debt was $0.0 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)|
|=||(105.879 / 477.04)||/||(126.298 / 440.759)|
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)|
|=||(63.746 / 440.759)||/||(69.064 / 477.04)|
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 - (260.998 + 21.636) / 439.251)||/||(1 - (264.793 + 24.266) / 447.777)|
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))|
|=||(27.715 / (27.715 + 24.266))||/||(29.463 / (29.463 + 21.636))|
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)|
|=||(155.569 / 477.04)||/||(148.846 / 440.759)|
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 + 138.909) / 439.251)||/||((0 + 129.649) / 447.777)|
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|
|=||(21.79 - 0.018||-||91.275)||/||439.251|
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 -3.41 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 Systems Inc Annual Data
Quality Systems Inc Quarterly Data