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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 The Spectranetics Corp was -0.04. The lowest was -3.93. And the median was -2.26.
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 The Spectranetics 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 * 0.8791||+||0.528 * 0.9944||+||0.404 * 1.0211||+||0.892 * 1.2003||+||0.115 * 0.8906|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9321||+||4.679 * 0.0008||-||0.327 * 1.2851|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $43.4 Mil.|
Revenue was 65.197 + 61.66 + 61.677 + 57.422 = $246.0 Mil.
Gross Profit was 48.839 + 45.851 + 45.763 + 42.369 = $182.8 Mil.
Total Current Assets was $158.3 Mil.
Total Assets was $468.0 Mil.
Property, Plant and Equipment(Net PPE) was $44.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $26.6 Mil.
Selling, General & Admin. Expense(SGA) was $143.4 Mil.
Total Current Liabilities was $63.7 Mil.
Long-Term Debt was $283.7 Mil.
Net Income was -10.46 + -14.493 + -7.216 + -27.305 = $-59.5 Mil.
Non Operating Income was -0.114 + -0.006 + -0.07 + -0.179 = $-0.4 Mil.
Cash Flow from Operations was -16.691 + -10.225 + -10.082 + -22.461 = $-59.5 Mil.
|Accounts Receivable was $41.1 Mil.
Revenue was 62.959 + 58.786 + 43.555 + 39.614 = $204.9 Mil.
Gross Profit was 46.04 + 43.086 + 33.049 + 29.28 = $151.5 Mil.
Total Current Assets was $170.1 Mil.
Total Assets was $457.8 Mil.
Property, Plant and Equipment(Net PPE) was $33.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $16.8 Mil.
Selling, General & Admin. Expense(SGA) was $128.1 Mil.
Total Current Liabilities was $41.3 Mil.
Long-Term Debt was $223.1 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)|
|=||(43.359 / 245.956)||/||(41.09 / 204.914)|
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)|
|=||(45.851 / 204.914)||/||(48.839 / 245.956)|
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 - (158.279 + 44.719) / 467.999)||/||(1 - (170.134 + 33.819) / 457.838)|
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))|
|=||(16.813 / (16.813 + 33.819))||/||(26.588 / (26.588 + 44.719))|
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)|
|=||(143.355 / 245.956)||/||(128.129 / 204.914)|
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)|
|=||((283.677 + 63.679) / 467.999)||/||((223.088 + 41.343) / 457.838)|
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|
|=||(-59.474 - -0.369||-||-59.459)||/||467.999|
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.
The Spectranetics Corp has a M-score of -2.50 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
The Spectranetics Corp Annual Data
The Spectranetics Corp Quarterly Data