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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.
Radisys Corporation has a M-score of -4.00 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Radisys Corporation was 2.88. The lowest was -4.32. And the median was -2.71.
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 Corporation 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 * 0.9749||+||0.528 * 1.1412||+||0.404 * 0.9018||+||0.892 * 0.8314||+||0.115 * 0.9338|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0966||+||4.679 * -0.2772||-||0.327 * 1.1856|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $44.0 Mil.|
Revenue was 50.138 + 54.109 + 65.438 + 68.178 = $237.9 Mil.
Gross Profit was 10.853 + 14.166 + 19.464 + 19.655 = $64.1 Mil.
Total Current Assets was $100.7 Mil.
Total Assets was $176.2 Mil.
Property, Plant and Equipment(Net PPE) was $14.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.7 Mil.
Selling, General & Admin. Expense(SGA) was $41.2 Mil.
Total Current Liabilities was $73.8 Mil.
Long-Term Debt was $18.0 Mil.
Net Income was -26.015 + -12.72 + -4.112 + -6.557 = $-49.4 Mil.
Non Operating Income was 0.962 + 0.199 + 0.226 + 0.136 = $1.5 Mil.
Cash Flow from Operations was -5.996 + -1.195 + 4.183 + 0.917 = $-2.1 Mil.
|Accounts Receivable was $54.3 Mil.
Revenue was 69.3 + 63.725 + 77.584 + 75.487 = $286.1 Mil.
Gross Profit was 20.7 + 17.648 + 26.651 + 23.04 = $88.0 Mil.
Total Current Assets was $126.0 Mil.
Total Assets was $232.4 Mil.
Property, Plant and Equipment(Net PPE) was $17.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $22.1 Mil.
Selling, General & Admin. Expense(SGA) was $45.2 Mil.
Total Current Liabilities was $84.1 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)|
|=||(43.993 / 237.863)||/||(54.275 / 286.096)|
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)|
|=||(14.166 / 286.096)||/||(10.853 / 237.863)|
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 - (100.693 + 14.854) / 176.185)||/||(1 - (125.988 + 17.713) / 232.394)|
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))|
|=||(22.079 / (22.079 + 17.713))||/||(21.748 / (21.748 + 14.854))|
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)|
|=||(41.21 / 237.863)||/||(45.2 / 286.096)|
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)|
|=||((18 + 73.773) / 176.185)||/||((18 + 84.101) / 232.394)|
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|
|=||(-49.404 - 1.523||-||-2.091)||/||176.185|
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 Corporation has a M-score of -4.00 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 Corporation Annual Data
Radisys Corporation Quarterly Data