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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.
During the past 6 years, the highest Beneish M-Score of RPX Corp was 0.52. The lowest was -4.06. And the median was -3.42.
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 RPX Corp 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 * 0.4346||+||0.528 * 1.0155||+||0.404 * 0.9265||+||0.892 * 1.1387||+||0.115 * 0.9978|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9398||+||4.679 * -0.2555||-||0.327 * 0.9201|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $10.7 Mil.|
Revenue was 68.212 + 67.551 + 83.287 + 67.747 = $286.8 Mil.
Gross Profit was 30.573 + 30.566 + 48.528 + 34.218 = $143.9 Mil.
Total Current Assets was $393.0 Mil.
Total Assets was $669.2 Mil.
Property, Plant and Equipment(Net PPE) was $4.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $140.5 Mil.
Selling, General & Admin. Expense(SGA) was $75.3 Mil.
Total Current Liabilities was $133.8 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 7.834 + 8.03 + 18.031 + 9.249 = $43.1 Mil.
Non Operating Income was 0.876 + 0.934 + 0.121 + 0.088 = $2.0 Mil.
Cash Flow from Operations was 30.464 + 30.997 + 77.071 + 73.549 = $212.1 Mil.
|Accounts Receivable was $21.6 Mil.
Revenue was 65.407 + 64.293 + 61.888 + 60.275 = $251.9 Mil.
Gross Profit was 34.963 + 32.751 + 32.968 + 27.634 = $128.3 Mil.
Total Current Assets was $346.9 Mil.
Total Assets was $625.0 Mil.
Property, Plant and Equipment(Net PPE) was $4.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $121.6 Mil.
Selling, General & Admin. Expense(SGA) was $70.4 Mil.
Total Current Liabilities was $135.8 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)|
|=||(10.676 / 286.797)||/||(21.572 / 251.863)|
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)|
|=||(30.566 / 251.863)||/||(30.573 / 286.797)|
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 - (392.964 + 4.544) / 669.228)||/||(1 - (346.879 + 4.214) / 624.96)|
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))|
|=||(121.562 / (121.562 + 4.214))||/||(140.464 / (140.464 + 4.544))|
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)|
|=||(75.288 / 286.797)||/||(70.352 / 251.863)|
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 + 133.781) / 669.228)||/||((0 + 135.779) / 624.96)|
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|
|=||(43.144 - 2.019||-||212.081)||/||669.228|
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.
RPX Corp has a M-score of -4.06 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
RPX Corp Annual Data
RPX Corp Quarterly Data