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

Warning Sign:

Beneish M-Score 19.92 higher than -2.22, which implies that it might have manipulated its financial results.

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 19.92 signals that the company is a manipulator.

QSII' s Beneish M-Score Range Over the Past 10 Years
Min: -3.75   Max: 19.69
Current: 19.92

-3.75
19.69

During the past 13 years, the highest Beneish M-Score of Quality Systems Inc was 19.69. The lowest was -3.75. And the median was -2.53.


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 * 0.8463+0.528 * 0.9784+0.404 * 1.0286+0.892 * 1.0334+0.115 * 1.0835
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9781+4.679 * 4.8048-0.327 * 0.9565
=19.92

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $92.6 Mil.
Revenue was 117.032 + 125.369 + 122.164 + 128.388 = $493.0 Mil.
Gross Profit was 63.247 + 68.771 + 66.187 + 72.547 = $270.8 Mil.
Total Current Assets was $251.3 Mil.
Total Assets was $433.4 Mil.
Property, Plant and Equipment(Net PPE) was $23.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $26.4 Mil.
Selling, General & Admin. Expense(SGA) was $157.2 Mil.
Total Current Liabilities was $131.1 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 7.302 + 8.315 + 6.362 + 10.743 = $32.7 Mil.
Non Operating Income was -0.043 + -0.054 + -0.05 + -0.045 = $-0.2 Mil.
Cash Flow from Operations was 13.406 + 10.179 + 3.707 + -2076.742 = $-2,049.5 Mil.
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.



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)
=(92.592 / 492.953) / (105.879 / 477.04)
=0.18783129 / 0.22194994
=0.8463

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)
=(68.771 / 477.04) / (63.247 / 492.953)
=0.53740357 / 0.54924506
=0.9784

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 - (251.269 + 23.171) / 433.39) / (1 - (260.998 + 21.636) / 439.251)
=0.36675973 / 0.35655468
=1.0286

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
=492.953 / 477.04
=1.0334

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))
=(29.463 / (29.463 + 21.636)) / (26.358 / (26.358 + 23.171))
=0.57658663 / 0.53217307
=1.0835

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)
=(157.241 / 492.953) / (155.569 / 477.04)
=0.31897767 / 0.32611311
=0.9781

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 + 131.095) / 433.39) / ((0 + 138.909) / 439.251)
=0.30248737 / 0.3162406
=0.9565

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
=(32.722 - -0.192 - -2049.45) / 433.39
=4.8048

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 19.92 signals that the company is likely to 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

Mar06Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14Mar15
DSRI 0.99841.08661.00930.89341.00381.07410.85730.950.79070.8622
GMI 0.94990.98411.0181.04221.02850.97030.98621.10251.16450.9268
AQI 1.0591.00582.1071.33541.12120.84091.12821.1211.23071.0078
SGI 1.34091.31751.18671.31641.18861.21091.21641.07070.96621.1025
DEPI 1.0350.99690.8791.00550.99981.06811.0720.9560.94090.954
SGAI 1.07020.96780.990.991.0541.02870.9781.07541.0410.9615
LVGI 1.1210.98210.99690.880.9931.1050.81460.97540.98121.1971
TATA -0.07740.0024-0.0238-0.0096-0.0229-0.0232-0.0052-0.057-0.195-0.1202
M-score -2.59-2.10-1.97-2.14-2.36-2.44-2.33-2.64-3.44-3.18

Quality Systems Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.93930.86620.79070.80210.73790.77460.86220.81890.85440.8463
GMI 1.07571.17141.16451.17041.17710.95270.92680.90340.87880.9784
AQI 1.39691.17521.23071.26930.90081.00591.00781.00111.00511.0286
SGI 0.97860.96250.96621.00351.0361.08231.10251.09151.07971.0334
DEPI 0.99560.98110.94090.93810.90960.92470.9541.00841.04281.0835
SGAI 1.0631.07211.0411.02420.98780.96570.96150.97550.97750.9781
LVGI 0.99351.20350.98121.00731.11231.09221.19711.11670.98470.9565
TATA -0.1003-0.1969-0.195-0.1881-0.2293-0.1584.44164.67594.76714.8048
M-score -2.83-3.48-3.44-3.35-3.75-3.4118.1719.2319.7119.92
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