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Beneish M-Score -0.57 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.
During the past 8 years, the highest Beneish M-Score of RPX Corp was -0.57. The lowest was -3.83. 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 * 4.0579||+||0.528 * 1.2015||+||0.404 * 1.3943||+||0.892 * 1.1412||+||0.115 * 1.0078|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1369||+||4.679 * -0.2287||-||0.327 * 1.6238|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $64.4 Mil.|
Revenue was 81.802 + 88.461 + 83.109 + 79.735 = $333.1 Mil.
Gross Profit was 32.106 + 37.631 + 34.039 + 32.069 = $135.8 Mil.
Total Current Assets was $260.4 Mil.
Total Assets was $735.3 Mil.
Property, Plant and Equipment(Net PPE) was $6.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $171.6 Mil.
Selling, General & Admin. Expense(SGA) was $100.5 Mil.
Total Current Liabilities was $146.8 Mil.
Long-Term Debt was $88.1 Mil.
Net Income was 1.733 + 8.115 + 4.15 + 4.237 = $18.2 Mil.
Non Operating Income was -1.383 + -0.49 + -0.768 + 1.805 = $-0.8 Mil.
Cash Flow from Operations was 67.457 + 30.568 + 34.102 + 55.129 = $187.3 Mil.
|Accounts Receivable was $13.9 Mil.
Revenue was 72.831 + 68.212 + 67.551 + 83.287 = $291.9 Mil.
Gross Profit was 33.356 + 30.573 + 30.566 + 48.528 = $143.0 Mil.
Total Current Assets was $353.2 Mil.
Total Assets was $658.6 Mil.
Property, Plant and Equipment(Net PPE) was $4.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $145.8 Mil.
Selling, General & Admin. Expense(SGA) was $77.4 Mil.
Total Current Liabilities was $129.6 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)|
|=||(64.395 / 333.107)||/||(13.905 / 291.881)|
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)|
|=||(143.023 / 291.881)||/||(135.845 / 333.107)|
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 - (260.407 + 6.948) / 735.289)||/||(1 - (353.247 + 4.733) / 658.561)|
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))|
|=||(145.835 / (145.835 + 4.733))||/||(171.623 / (171.623 + 6.948))|
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)|
|=||(100.457 / 333.107)||/||(77.428 / 291.881)|
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)|
|=||((88.11 + 146.809) / 735.289)||/||((0 + 129.572) / 658.561)|
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|
|=||(18.235 - -0.836||-||187.256)||/||735.289|
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 -0.57 signals that the company is likely to 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