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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 -2.72.
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 * 1.4513||+||0.528 * 0.9513||+||0.404 * 0.6896||+||0.892 * 0.9577||+||0.115 * 0.8979|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8871||+||4.679 * -0.1274||-||0.327 * 1.177|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|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 $28.7 Mil.
Total Current Liabilities was $98.2 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -1.44 + -2.066 + -4.119 + -7.053 = $-14.7 Mil.
Non Operating Income was 0.422 + 0.568 + 0.161 + 0.397 = $1.5 Mil.
Cash Flow from Operations was -2.045 + 0.488 + 2.986 + 3.628 = $5.1 Mil.
|Accounts Receivable was $43.8 Mil.
Revenue was 48.174 + 50.805 + 49.964 + 43.799 = $192.7 Mil.
Gross Profit was 13.95 + 14.697 + 12.007 + 11.148 = $51.8 Mil.
Total Current Assets was $103.3 Mil.
Total Assets was $160.9 Mil.
Property, Plant and Equipment(Net PPE) was $9.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $20.2 Mil.
Selling, General & Admin. Expense(SGA) was $33.8 Mil.
Total Current Liabilities was $80.3 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)|
|=||(60.942 / 184.593)||/||(43.845 / 192.742)|
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)|
|=||(13.007 / 192.742)||/||(13.918 / 184.593)|
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 - (126.729 + 6.134) / 167.069)||/||(1 - (103.338 + 9.786) / 160.896)|
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))|
|=||(20.24 / (20.24 + 9.786))||/||(18.478 / (18.478 + 6.134))|
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)|
|=||(28.704 / 184.593)||/||(33.787 / 192.742)|
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 + 98.167) / 167.069)||/||((0 + 80.32) / 160.896)|
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|
|=||(-14.678 - 1.548||-||5.057)||/||167.069|
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 -2.90 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