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Quality Systems Inc (NAS:QSII)
Beneish M-Score
-3.35 (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 -3.35 suggests that the company is not a manipulator.

QSII' s 10-Year Beneish M-Score Range
Min: -3.47   Max: -1.16
Current: -3.35

-3.47
-1.16

During the past 13 years, the highest Beneish M-Score of Quality Systems Inc was -1.16. The lowest was -3.47. 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 * 0.8021+0.528 * 1.1704+0.404 * 1.2693+0.892 * 1.0035+0.115 * 0.9381
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0242+4.679 * -0.1883-0.327 * 1.0073
=-3.35

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $111.8 Mil.
Revenue was 117.894 + 115.203 + 108.854 + 111.081 = $453.0 Mil.
Gross Profit was 61.704 + 61.849 + 37.799 + 63.399 = $224.8 Mil.
Total Current Assets was $259.2 Mil.
Total Assets was $441.8 Mil.
Property, Plant and Equipment(Net PPE) was $22.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $29.9 Mil.
Selling, General & Admin. Expense(SGA) was $150.8 Mil.
Total Current Liabilities was $124.7 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 5.163 + 5.201 + -12.587 + 10.121 = $7.9 Mil.
Non Operating Income was 0.009 + 0.035 + 0.018 + -0.155 = $-0.1 Mil.
Cash Flow from Operations was 18.565 + 33.67 + 27.704 + 11.239 = $91.2 Mil.
Accounts Receivable was $138.9 Mil.
Revenue was 109.529 + 111.295 + 114.51 + 116.128 = $451.5 Mil.
Gross Profit was 61.457 + 62.998 + 67.914 + 69.764 = $262.1 Mil.
Total Current Assets was $296.3 Mil.
Total Assets was $444.8 Mil.
Property, Plant and Equipment(Net PPE) was $21.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $24.7 Mil.
Selling, General & Admin. Expense(SGA) was $146.8 Mil.
Total Current Liabilities was $124.7 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)
=(111.842 / 453.032) / (138.949 / 451.462)
=0.24687439 / 0.30777563
=0.8021

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)
=(61.849 / 451.462) / (61.704 / 453.032)
=0.58063137 / 0.49610403
=1.1704

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 - (259.162 + 22.915) / 441.781) / (1 - (296.306 + 21.825) / 444.821)
=0.36150038 / 0.28481119
=1.2693

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
=453.032 / 451.462
=1.0035

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))
=(24.701 / (24.701 + 21.825)) / (29.874 / (29.874 + 22.915))
=0.53090745 / 0.56591335
=0.9381

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)
=(150.848 / 453.032) / (146.768 / 451.462)
=0.33297427 / 0.32509491
=1.0242

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 + 124.742) / 441.781) / ((0 + 124.691) / 444.821)
=0.28236162 / 0.28031725
=1.0073

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
=(7.898 - -0.093 - 91.178) / 441.781
=-0.1883

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 -3.35 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

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.85730.85240.87940.86660.950.89930.93930.86620.76920.8021
GMI 0.98621.02511.0651.09911.10251.08871.07571.17141.16451.1704
AQI 1.12821.24431.24591.25261.1211.0511.39691.17521.30141.2693
SGI 1.21641.20711.14891.09571.07071.00840.97860.96250.96621.0035
DEPI 1.0721.07451.0070.97180.9560.92310.99560.98110.94090.9381
SGAI 0.9781.01191.03891.06221.07541.0691.0631.07211.0411.0242
LVGI 0.81460.90260.91530.76910.97540.94490.99351.20350.97091.0073
TATA -0.0052-0.0086-0.00690.0015-0.057-0.0886-0.0989-0.1944-0.198-0.1883
M-score -2.33-2.32-2.33-2.29-2.64-2.91-2.83-3.47-3.44-3.35
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