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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 -2.69.
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 * 0.9411||+||0.528 * 0.8793||+||0.404 * 1.0696||+||0.892 * 0.9834||+||0.115 * 0.8772|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.839||+||4.679 * -0.2112||-||0.327 * 0.8767|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $39.0 Mil.|
Revenue was 47.049 + 48.687 + 48.174 + 50.805 = $194.7 Mil.
Gross Profit was 12.601 + 12.626 + 13.95 + 14.697 = $53.9 Mil.
Total Current Assets was $79.0 Mil.
Total Assets was $127.2 Mil.
Property, Plant and Equipment(Net PPE) was $7.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $19.4 Mil.
Selling, General & Admin. Expense(SGA) was $32.3 Mil.
Total Current Liabilities was $55.9 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -4.119 + -7.053 + -4.467 + -4.469 = $-20.1 Mil.
Non Operating Income was 0.161 + 0.397 + 0.59 + 0.463 = $1.6 Mil.
Cash Flow from Operations was 2.986 + 3.628 + 0.175 + -1.65 = $5.1 Mil.
|Accounts Receivable was $42.1 Mil.
Revenue was 49.964 + 43.799 + 50.138 + 54.109 = $198.0 Mil.
Gross Profit was 12.007 + 11.148 + 10.853 + 14.166 = $48.2 Mil.
Total Current Assets was $114.1 Mil.
Total Assets was $180.1 Mil.
Property, Plant and Equipment(Net PPE) was $12.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.0 Mil.
Selling, General & Admin. Expense(SGA) was $39.1 Mil.
Total Current Liabilities was $90.4 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)|
|=||(38.951 / 194.715)||/||(42.091 / 198.01)|
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)|
|=||(12.626 / 198.01)||/||(12.601 / 194.715)|
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 - (79.03 + 7.625) / 127.173)||/||(1 - (114.137 + 12.346) / 180.143)|
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))|
|=||(20.978 / (20.978 + 12.346))||/||(19.378 / (19.378 + 7.625))|
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)|
|=||(32.288 / 194.715)||/||(39.136 / 198.01)|
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 + 55.931) / 127.173)||/||((0 + 90.365) / 180.143)|
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|
|=||(-20.108 - 1.611||-||5.139)||/||127.173|
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 -3.52 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