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GuruFocus has detected 3 Warning Signs with Radisys Corp $RSYS.
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Radisys Corp (NAS:RSYS)
Beneish M-Score
-3.53 (As of Today)

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 Corp has a M-score of -3.53 suggests that the company is not a manipulator.

RSYS' s Beneish M-Score Range Over the Past 10 Years
Min: -4.31   Max: 2.88
Current: -3.53

-4.31
2.88

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.


Definition

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 * 0.5473+0.528 * 1.0699+0.404 * 0.8701+0.892 * 1.1506+0.115 * 1.0428
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9569+4.679 * -0.1729-0.327 * 0.8718
=-3.53

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $38.4 Mil.
Revenue was 40.561 + 55.397 + 61.288 + 55.146 = $212.4 Mil.
Gross Profit was 13.613 + 14.246 + 15.445 + 12.784 = $56.1 Mil.
Total Current Assets was $98.6 Mil.
Total Assets was $128.2 Mil.
Property, Plant and Equipment(Net PPE) was $6.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.3 Mil.
Selling, General & Admin. Expense(SGA) was $33.7 Mil.
Total Current Liabilities was $65.7 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -4.057 + -2.638 + -0.591 + -2.965 = $-10.3 Mil.
Non Operating Income was 0.672 + 0.255 + 1.069 + 0.101 = $2.1 Mil.
Cash Flow from Operations was 7.169 + 2.017 + -1.059 + 1.682 = $9.8 Mil.
Accounts Receivable was $60.9 Mil.
Revenue was 44.077 + 44.78 + 47.049 + 48.687 = $184.6 Mil.
Gross Profit was 13.918 + 13.007 + 12.601 + 12.626 = $52.2 Mil.
Total Current Assets was $126.7 Mil.
Total Assets was $167.1 Mil.
Property, Plant and Equipment(Net PPE) was $6.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.5 Mil.
Selling, General & Admin. Expense(SGA) was $30.6 Mil.
Total Current Liabilities was $98.2 Mil.
Long-Term Debt was $0.0 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(38.378 / 212.392) / (60.942 / 184.593)
=0.18069419 / 0.33014253
=0.5473

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(52.152 / 184.593) / (56.088 / 212.392)
=0.28252426 / 0.26407774
=1.0699

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (98.637 + 6.713) / 128.185) / (1 - (126.729 + 6.134) / 167.069)
=0.17814097 / 0.20474175
=0.8701

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=212.392 / 184.593
=1.1506

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))
=(18.478 / (18.478 + 6.134)) / (17.256 / (17.256 + 6.713))
=0.75077198 / 0.71992991
=1.0428

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)
=(33.722 / 212.392) / (30.628 / 184.593)
=0.15877246 / 0.16592178
=0.9569

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 + 65.663) / 128.185) / ((0 + 98.167) / 167.069)
=0.51225182 / 0.58758357
=0.8718

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(-10.251 - 2.097 - 9.809) / 128.185
=-0.1729

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 -3.53 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Radisys Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.49110.56361.19931.0280.98681.21920.95881.30831.45130.5473
GMI 1.22220.85650.84530.99451.04890.95041.14121.00330.95131.0699
AQI 0.97121.13220.2681.12793.49080.84130.90180.86270.68960.8701
SGI 1.1121.14560.81670.93441.16370.86470.83140.81030.95771.1506
DEPI 0.75271.03351.12811.09071.06430.9430.93380.88150.89791.0428
SGAI 1.09470.92691.08641.08030.9950.99151.03251.14060.89180.9569
LVGI 1.0471.11471.08680.81890.95011.08071.18560.95841.1770.8718
TATA -0.095-0.3328-0.2462-0.0677-0.0567-0.2136-0.2771-0.1378-0.1274-0.1731
M-score -2.33-4.35-4.02-2.72-1.55-3.52-4.00-3.09-2.90-3.53

Radisys Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.36241.30831.20020.94111.03241.45130.96241.04721.12670.5473
GMI 1.15071.00330.96660.87930.90450.95130.98461.02981.05881.0699
AQI 0.8280.86271.09141.06960.94750.68960.70350.63910.61420.8701
SGI 0.75750.81030.92570.98340.96910.95770.96671.05431.14421.1506
DEPI 0.88950.88150.88760.87720.89720.89790.89940.92361.01781.0428
SGAI 1.08271.14060.97780.8940.9290.89180.94260.93550.91050.9569
LVGI 1.03930.95840.90750.87670.95061.1771.13011.15151.16860.8718
TATA -0.2313-0.1378-0.1963-0.2108-0.2079-0.1271-0.1124-0.0604-0.0713-0.1729
M-score -3.47-3.09-3.24-3.53-3.51-2.90-3.24-2.85-2.73-3.53
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