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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 -2.67.
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 * 1.2002||+||0.528 * 0.9666||+||0.404 * 1.0914||+||0.892 * 0.9257||+||0.115 * 0.8876|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9185||+||4.679 * -0.1967||-||0.327 * 0.9075|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $41.7 Mil.|
Revenue was 48.687 + 48.174 + 50.805 + 49.964 = $197.6 Mil.
Gross Profit was 12.626 + 13.95 + 14.697 + 12.007 = $53.3 Mil.
Total Current Assets was $78.7 Mil.
Total Assets was $131.4 Mil.
Property, Plant and Equipment(Net PPE) was $8.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $19.8 Mil.
Selling, General & Admin. Expense(SGA) was $33.8 Mil.
Total Current Liabilities was $57.5 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -7.053 + -4.467 + -4.469 + -8.211 = $-24.2 Mil.
Non Operating Income was 0.397 + 0.59 + 0.463 + 0.157 = $1.6 Mil.
Cash Flow from Operations was 3.628 + 0.175 + -1.65 + -2.118 = $0.0 Mil.
|Accounts Receivable was $37.5 Mil.
Revenue was 43.799 + 50.138 + 54.109 + 65.438 = $213.5 Mil.
Gross Profit was 11.148 + 10.853 + 14.166 + 19.464 = $55.6 Mil.
Total Current Assets was $115.9 Mil.
Total Assets was $186.5 Mil.
Property, Plant and Equipment(Net PPE) was $13.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.5 Mil.
Selling, General & Admin. Expense(SGA) was $39.7 Mil.
Total Current Liabilities was $89.9 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)|
|=||(41.716 / 197.63)||/||(37.547 / 213.484)|
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)|
|=||(13.95 / 213.484)||/||(12.626 / 197.63)|
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 - (78.684 + 8.791) / 131.39)||/||(1 - (115.899 + 13.474) / 186.481)|
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))|
|=||(21.469 / (21.469 + 13.474))||/||(19.773 / (19.773 + 8.791))|
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)|
|=||(33.766 / 197.63)||/||(39.71 / 213.484)|
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 + 57.509) / 131.39)||/||((0 + 89.941) / 186.481)|
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|
|=||(-24.2 - 1.607||-||0.035)||/||131.39|
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 -3.23 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