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Quality Systems, Inc. (NAS:QSII)
Beneish M-Score
-3.38 (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 -3.38 suggests that the company is not a manipulator.

QSII' s 10-Year Beneish M-Score Range
Min: -3.38   Max: -1.16
Current: -3.38

-3.38
-1.16

During the past 13 years, the highest Beneish M-Score of Quality Systems, Inc. was -1.16. The lowest was -3.38. And the median was -2.48.


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 * 0.9591+0.528 * 1.1714+0.404 * 1.1752+0.892 * 0.9625+0.115 * 0.9811
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0721+4.679 * -0.1944-0.327 * 1.2035
=-3.38

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $141.6 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.
Net Income was -12.587 + 10.121 + 12.945 + -4.09 = $6.4 Mil.
Non Operating Income was 0.018 + -0.155 + -0.254 + 0.036 = $-0.4 Mil.
Cash Flow from Operations was 27.704 + 11.239 + 31.527 + 23.32 = $93.8 Mil.
Accounts Receivable was $153.4 Mil.
Revenue was 114.51 + 116.128 + 118.296 + 108.994 = $457.9 Mil.
Gross Profit was 67.914 + 69.764 + 69.901 + 67.053 = $274.6 Mil.
Total Current Assets was $286.5 Mil.
Total Assets was $440.2 Mil.
Property, Plant and Equipment(Net PPE) was $20.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $23.0 Mil.
Selling, General & Admin. Expense(SGA) was $144.2 Mil.
Total Current Liabilities was $105.9 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)
=(141.568 / 440.759) / (153.359 / 457.928)
=0.3211914 / 0.33489763
=0.9591

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)
=(63.399 / 457.928) / (37.799 / 440.759)
=0.59972747 / 0.51196459
=1.1714

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 - (264.793 + 24.266) / 447.777) / (1 - (286.518 + 20.93) / 440.22)
=0.35445769 / 0.30160374
=1.1752

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
=440.759 / 457.928
=0.9625

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))
=(22.958 / (22.958 + 20.93)) / (27.715 / (27.715 + 24.266))
=0.52310427 / 0.53317558
=0.9811

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)
=(148.846 / 440.759) / (144.24 / 457.928)
=0.33770382 / 0.31498401
=1.0721

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 + 129.649) / 447.777) / ((0 + 105.909) / 440.22)
=0.28953921 / 0.24058198
=1.2035

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
=(6.389 - -0.355 - 93.79) / 447.777
=-0.1944

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 -3.38 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

Mar04Mar05Mar06Mar07Mar08Mar09Mar10Mar11Mar12Mar13
DSRI 0.89411.30811.02521.05831.00930.9490.97091.04540.87270.9332
GMI 0.95050.94150.94990.98411.0181.04221.02850.97030.98621.1025
AQI 0.86360.86991.0591.00582.1071.33541.12120.84091.12821.121
SGI 1.29511.25411.34091.31751.18671.31641.18861.21091.21641.0707
DEPI 1.02681.02411.0350.99690.8791.00550.99981.06811.0720.956
SGAI 0.98361.0141.07020.96780.990.991.0541.02870.9781.0754
LVGI 0.91161.25811.1210.98210.99690.880.9931.1050.81460.9754
TATA -0.0841-0.0643-0.07740.0024-0.0238-0.0096-0.0229-0.0232-0.0052-0.057
M-score -2.75-2.44-2.57-2.13-1.97-2.09-2.39-2.47-2.31-2.65

Quality Systems, Inc. Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.09021.07020.87270.85240.89530.85030.93320.89930.93220.9591
GMI 0.95510.96140.98621.02511.0651.09911.10251.08871.07571.1714
AQI 0.90771.02041.12821.24431.24591.25261.1211.0511.39691.1752
SGI 1.24921.24851.21641.20711.14891.09571.07071.00840.97860.9625
DEPI 1.15281.10831.0721.07451.0070.97180.9560.92310.99560.9811
SGAI 0.97180.95220.9781.01191.03891.06221.07541.0691.0631.0721
LVGI 0.94750.94060.81460.90260.91530.76910.97540.94490.99351.2035
TATA 0.01210.0176-0.0052-0.0086-0.00690.0015-0.057-0.0886-0.0989-0.1944
M-score -2.14-2.08-2.31-2.32-2.32-2.31-2.65-2.91-2.83-3.38
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