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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 Systems, Inc. has a M-score of -3.38 suggests that the company is not a manipulator.
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.
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|
|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
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)|
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)|
|=||(63.399 / 457.928)||/||(37.799 / 440.759)|
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 - (264.793 + 24.266) / 447.777)||/||(1 - (286.518 + 20.93) / 440.22)|
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))|
|=||(22.958 / (22.958 + 20.93))||/||(27.715 / (27.715 + 24.266))|
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)|
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)|
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|
|=||(6.389 - -0.355||-||93.79)||/||447.777|
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.
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