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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 -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 * 0.5901||+||0.528 * 1.0258||+||0.404 * 1.0962||+||0.892 * 1.0919||+||0.115 * 0.9911|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0499||+||4.679 * -0.2375||-||0.327 * 0.9516|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $24.8 Mil.|
Revenue was 67.747 + 65.407 + 64.293 + 61.888 = $259.3 Mil.
Gross Profit was 34.218 + 34.963 + 32.751 + 32.968 = $134.9 Mil.
Total Current Assets was $350.8 Mil.
Total Assets was $642.1 Mil.
Property, Plant and Equipment(Net PPE) was $4.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $123.1 Mil.
Selling, General & Admin. Expense(SGA) was $71.7 Mil.
Total Current Liabilities was $148.4 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 9.249 + 10.833 + 9.399 + 9.86 = $39.3 Mil.
Non Operating Income was 0.088 + 0.073 + 0.094 + 0.099 = $0.4 Mil.
Cash Flow from Operations was 73.549 + 17.615 + 32.178 + 68.127 = $191.5 Mil.
|Accounts Receivable was $38.5 Mil.
Revenue was 60.275 + 58.554 + 57.481 + 61.194 = $237.5 Mil.
Gross Profit was 27.634 + 28.788 + 32.787 + 37.524 = $126.7 Mil.
Total Current Assets was $343.9 Mil.
Total Assets was $588.8 Mil.
Property, Plant and Equipment(Net PPE) was $4.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $108.6 Mil.
Selling, General & Admin. Expense(SGA) was $62.5 Mil.
Total Current Liabilities was $143.1 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)|
|=||(24.793 / 259.335)||/||(38.477 / 237.504)|
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)|
|=||(34.963 / 237.504)||/||(34.218 / 259.335)|
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 - (350.776 + 4.151) / 642.064)||/||(1 - (343.926 + 4.667) / 588.801)|
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))|
|=||(108.629 / (108.629 + 4.667))||/||(123.138 / (123.138 + 4.151))|
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)|
|=||(71.679 / 259.335)||/||(62.525 / 237.504)|
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 + 148.448) / 642.064)||/||((0 + 143.062) / 588.801)|
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|
|=||(39.341 - 0.354||-||191.469)||/||642.064|
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 -3.83 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