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The zones of discrimination for M-Score is as such:
An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator.
An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.
The historical rank and industry rank for Rackspace Hosting's Beneish M-Score or its related term are showing as below:
During the past 12 years, the highest Beneish M-Score of Rackspace Hosting was 0.00. The lowest was 0.00. And the median was 0.00.
The historical data trend for Rackspace Hosting's Beneish M-Score can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Rackspace Hosting Annual Data | |||||||||||||||||||||
Trend | Dec06 | Dec07 | Dec08 | Dec09 | Dec10 | Dec11 | Dec12 | Dec13 | Dec14 | Dec15 | |||||||||||
Beneish M-Score | Get a 7-Day Free Trial | -3.20 | -3.27 | -3.20 | -3.65 | -3.77 |
Rackspace Hosting Quarterly Data | ||||||||||||||||||||
Dec11 | Mar12 | Jun12 | Sep12 | Dec12 | Mar13 | Jun13 | Sep13 | Dec13 | Mar14 | Jun14 | Sep14 | Dec14 | Mar15 | Jun15 | Sep15 | Dec15 | Mar16 | Jun16 | Sep16 | |
Beneish M-Score | Get a 7-Day Free Trial | -3.48 | -3.77 | -3.76 | -3.83 | -3.86 |
For the Information Technology Services subindustry, Rackspace Hosting's Beneish M-Score, along with its competitors' market caps and Beneish M-Score data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
For the Software industry and Technology sector, Rackspace Hosting's Beneish M-Score distribution charts can be found below:
* The bar in red indicates where Rackspace Hosting's Beneish M-Score falls into.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski 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 Rackspace Hosting 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 * 0.8899 | + | 0.528 * 1.0133 | + | 0.404 * 0.858 | + | 0.892 * 1.0665 | + | 0.115 * 0.8805 | |
- | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI | |||||||
- | 0.172 * 0.9614 | + | 4.679 * -0.253699 | - | 0.327 * 1.2923 | |||||||
= | -3.86 |
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
This Year (Sep16) TTM: | Last Year (Sep15) TTM: |
Total Receivables was $166 Mil. Revenue was 516.2 + 523.6 + 518.1 + 522.8 = $2,081 Mil. Gross Profit was 332.3 + 352.1 + 337.7 + 342.1 = $1,364 Mil. Total Current Assets was $864 Mil. Total Assets was $2,048 Mil. Property, Plant and Equipment(Net PPE) was $1,032 Mil. Depreciation, Depletion and Amortization(DDA) was $414 Mil. Selling, General, & Admin. Expense(SGA) was $603 Mil. Total Current Liabilities was $225 Mil. Long-Term Debt & Capital Lease Obligation was $644 Mil. Net Income was 38.6 + 35.8 + 48.8 + 31.1 = $154 Mil. Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil. Cash Flow from Operations was 148.8 + 164.9 + 156.2 + 204 = $674 Mil. |
Total Receivables was $175 Mil. Revenue was 508.9 + 489.4 + 480.2 + 472.422 = $1,951 Mil. Gross Profit was 336.2 + 324 + 317.4 + 318.51 = $1,296 Mil. Total Current Assets was $441 Mil. Total Assets was $1,754 Mil. Property, Plant and Equipment(Net PPE) was $1,161 Mil. Depreciation, Depletion and Amortization(DDA) was $391 Mil. Selling, General, & Admin. Expense(SGA) was $588 Mil. Total Current Liabilities was $410 Mil. Long-Term Debt & Capital Lease Obligation was $166 Mil. |
1. DSRI = Days Sales in Receivables Index
Measured as the ratio of Revenue in Total 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) |
= | (166 / 2080.7) | / | (174.9 / 1950.922) | |
= | 0.079781 | / | 0.08965 | |
= | 0.8899 |
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) | |
= | (1296.11 / 1950.922) | / | (1364.2 / 2080.7) | |
= | 0.664358 | / | 0.655645 | |
= | 1.0133 |
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 Property, Plant and Equipment to Total Assets.
AQI | = | (1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) | / | (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1) |
= | (1 - (864.3 + 1031.7) / 2048.1) | / | (1 - (440.7 + 1161.3) / 1753.8) | |
= | 0.074264 | / | 0.086555 | |
= | 0.858 |
4. SGI = Sales Growth Index
Ratio of Revenue 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 | |
= | 2080.7 | / | 1950.922 | |
= | 1.0665 |
5. DEPI = Depreciation Index
Measured as the ratio of the rate of Depreciation, Depletion and Amortization 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)) |
= | (391.113 / (391.113 + 1161.3)) | / | (413.5 / (413.5 + 1031.7)) | |
= | 0.251939 | / | 0.28612 | |
= | 0.8805 |
Note: If the Depreciation, Depletion and Amortization data is not available, we assume that the depreciation rate is constant and set the Depreciation Index to 1.
6. SGAI = Sales, General and Administrative expenses Index
The ratio of Selling, General, & Admin. Expense(SGA) to Sales 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) |
= | (603.3 / 2080.7) | / | (588.407 / 1950.922) | |
= | 0.28995 | / | 0.301605 | |
= | 0.9614 |
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 in leverage
LVGI | = | ((LTD_t + CurrentLiabilities_t) / TotalAssets_t) | / | ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1) |
= | ((644.3 + 224.7) / 2048.1) | / | ((165.9 + 409.9) / 1753.8) | |
= | 0.424296 | / | 0.328316 | |
= | 1.2923 |
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 | |
= | (154.3 - 0 | - | 673.9) | / | 2048.1 | |
= | -0.253699 |
An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator. An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.
Rackspace Hosting has a M-score of -3.86 suggests that the company is unlikely to be a manipulator.
Thank you for viewing the detailed overview of Rackspace Hosting's Beneish M-Score provided by GuruFocus.com. Please click on the following links to see related term pages.
Alex Pinchev | officer: EVP, Global Sales & Marketing | BMC SOFTWARE INC, 2101 CITYWEST BLVD, HOUSTON TX 77042 |
Lila Tretikov | director | 149 NEW MONTGOMERY STREET, FLOOR 6, SAN FRANCISCO CA 94105 |
John E Harper | director | 2300 WEST PLANO PARKWAY, PLANO TX 75075 |
Joseph Saporito | officer: Chief Accounting Officer | |
Kevin Costello | director | C/O ARIBA INC, 807 11TH AVENUE, SUNNYVALE CA 94089 |
Graham M Weston | director, 10 percent owner | 425 SOLEDAD SUITE 500, SAN ANTONIO TX 78205 |
Eugene V Defelice | officer: SVP, General Counsel | 1506 COVENTRY LANE SOUTHLAKE TX 76092 |
Michael S Gilliland | director | 3720 BEVERLY DRIVE, DALLAS TX 75205 |
Still George J Jr | director | NORWEST VENTURE PARTNERS, 525 UNIVERSITY AVENUE, SUITE 800, PALO ALTO CA 94301 |
A Lanham Napier | director, officer: CEO | 701 W. CASTANO, SAN ANTONIO TX 78209 |
Palmer L Moe | director | 5000 WALZEM SAN ANTONIO TX 78218 |
Wells Fargo & Company/mn | 10 percent owner | 420 MONTGOMERY STREET, SAN FRANCISCO CA 94163 |
Promod Haque | 10 percent owner | C/O NORWEST VENTURE PARTNERS, 525 UNIVERSITY AVENUE, SUITE 800, PALO ALTO CA 94301 |
Norwest Venture Partners Viii Lp | 10 percent owner | C/O NORWEST VENTURE PARTNERS 525 UNIVERSITY AVENUE, SUITE 800 PALO ALTO CA 94301 |
James J Goetz | 10 percent owner | C/O SEQUOIA CAPITAL, 2800 SAND HILL RD, SUITE 101, MENLO PARK CA 94025 |
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