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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 -2.70.
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 * 1.0324||+||0.528 * 0.9045||+||0.404 * 0.9475||+||0.892 * 0.9691||+||0.115 * 0.8972|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8688||+||4.679 * -0.2083||-||0.327 * 0.9506|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|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 $31.3 Mil.
Total Current Liabilities was $58.6 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -2.066 + -4.119 + -7.053 + -4.467 = $-17.7 Mil.
Non Operating Income was 0.568 + 0.161 + 0.397 + 0.59 = $1.7 Mil.
Cash Flow from Operations was 0.488 + 2.986 + 3.628 + 0.175 = $7.3 Mil.
|Accounts Receivable was $43.9 Mil.
Revenue was 50.805 + 49.964 + 43.799 + 50.138 = $194.7 Mil.
Gross Profit was 14.697 + 12.007 + 11.148 + 10.853 = $48.7 Mil.
Total Current Assets was $103.2 Mil.
Total Assets was $163.8 Mil.
Property, Plant and Equipment(Net PPE) was $10.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $20.5 Mil.
Selling, General & Admin. Expense(SGA) was $37.2 Mil.
Total Current Liabilities was $78.7 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)|
|=||(43.881 / 188.69)||/||(43.86 / 194.706)|
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)|
|=||(12.601 / 194.706)||/||(13.007 / 188.69)|
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 - (84.24 + 6.828) / 128.187)||/||(1 - (103.171 + 10.597) / 163.838)|
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))|
|=||(20.519 / (20.519 + 10.597))||/||(18.939 / (18.939 + 6.828))|
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)|
|=||(31.295 / 188.69)||/||(37.168 / 194.706)|
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 + 58.555) / 128.187)||/||((0 + 78.727) / 163.838)|
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|
|=||(-17.705 - 1.716||-||7.277)||/||128.187|
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 -3.50 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