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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 -4.31. And the median was -2.77.
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 * 1.1267||+||0.528 * 1.0588||+||0.404 * 0.6142||+||0.892 * 1.1442||+||0.115 * 1.0178|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9177||+||4.679 * -0.0713||-||0.327 * 1.1686|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $56.6 Mil.|
Revenue was 55.397 + 61.288 + 55.146 + 44.077 = $215.9 Mil.
Gross Profit was 14.246 + 15.445 + 12.784 + 13.918 = $56.4 Mil.
Total Current Assets was $109.6 Mil.
Total Assets was $141.3 Mil.
Property, Plant and Equipment(Net PPE) was $6.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.2 Mil.
Selling, General & Admin. Expense(SGA) was $30.7 Mil.
Total Current Liabilities was $75.4 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -2.638 + -0.591 + -2.965 + -1.44 = $-7.6 Mil.
Non Operating Income was 0.255 + 1.069 + 0.101 + 0.422 = $1.8 Mil.
Cash Flow from Operations was 2.017 + -1.059 + 1.682 + -2.045 = $0.6 Mil.
|Accounts Receivable was $43.9 Mil.
Revenue was 44.78 + 47.049 + 48.687 + 48.174 = $188.7 Mil.
Gross Profit was 13.007 + 12.601 + 12.626 + 13.95 = $52.2 Mil.
Total Current Assets was $84.2 Mil.
Total Assets was $128.2 Mil.
Property, Plant and Equipment(Net PPE) was $6.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.9 Mil.
Selling, General & Admin. Expense(SGA) was $29.2 Mil.
Total Current Liabilities was $58.6 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)|
|=||(56.572 / 215.908)||/||(43.881 / 188.69)|
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)|
|=||(52.184 / 188.69)||/||(56.393 / 215.908)|
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 - (109.554 + 6.616) / 141.3)||/||(1 - (84.24 + 6.828) / 128.187)|
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))|
|=||(18.939 / (18.939 + 6.828))||/||(17.197 / (17.197 + 6.616))|
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)|
|=||(30.682 / 215.908)||/||(29.22 / 188.69)|
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 + 75.424) / 141.3)||/||((0 + 58.555) / 128.187)|
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|
|=||(-7.634 - 1.847||-||0.595)||/||141.3|
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 -2.73 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