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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 13 years, the highest Beneish M-Score of Radisys Corp was 2.88. The lowest was -5.53. And the median was -2.65.
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 Radisys 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 * 1.3624||+||0.528 * 1.1507||+||0.404 * 0.828||+||0.892 * 0.7575||+||0.115 * 0.8895|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1577||+||4.679 * -0.2313||-||0.327 * 1.0393|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $43.9 Mil.|
Revenue was 50.805 + 49.964 + 43.799 + 50.138 = $194.7 Mil.
Gross Profit was 14.697 + 12.007 + 11.148 + 10.853 = $48.7 Mil.
Total Current Assets was $103.2 Mil.
Total Assets was $163.8 Mil.
Property, Plant and Equipment(Net PPE) was $10.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $20.5 Mil.
Selling, General & Admin. Expense(SGA) was $37.2 Mil.
Total Current Liabilities was $78.7 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -4.469 + -8.211 + -10.434 + -26.015 = $-49.1 Mil.
Non Operating Income was 0.463 + 0.157 + 0.17 + 0.938 = $1.7 Mil.
Cash Flow from Operations was -1.65 + -2.118 + -3.204 + -5.996 = $-13.0 Mil.
|Accounts Receivable was $42.5 Mil.
Revenue was 54.109 + 65.438 + 68.178 + 69.3 = $257.0 Mil.
Gross Profit was 14.166 + 19.464 + 19.655 + 20.7 = $74.0 Mil.
Total Current Assets was $111.1 Mil.
Total Assets was $200.9 Mil.
Property, Plant and Equipment(Net PPE) was $15.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $22.2 Mil.
Selling, General & Admin. Expense(SGA) was $42.4 Mil.
Total Current Liabilities was $74.9 Mil.
Long-Term Debt was $18.0 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)|
|=||(43.86 / 194.706)||/||(42.496 / 257.025)|
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)|
|=||(12.007 / 257.025)||/||(14.697 / 194.706)|
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 - (103.171 + 10.597) / 163.838)||/||(1 - (111.075 + 15.66) / 200.879)|
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))|
|=||(22.217 / (22.217 + 15.66))||/||(20.519 / (20.519 + 10.597))|
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)|
|=||(37.168 / 194.706)||/||(42.379 / 257.025)|
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 + 78.727) / 163.838)||/||((18 + 74.876) / 200.879)|
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|
|=||(-49.129 - 1.728||-||-12.968)||/||163.838|
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.
Radisys Corp has a M-score of -3.49 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
Radisys Corp Annual Data
Radisys Corp Quarterly Data