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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 1.15. 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 * 1.0135||+||0.528 * 1.0052||+||0.404 * 6.4809||+||0.892 * 1.3855||+||0.115 * 0.7749|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0231||+||4.679 * -0.0622||-||0.327 * 6.4908|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $38.8 Mil.|
Revenue was 57.422 + 62.959 + 58.786 + 43.555 = $222.7 Mil.
Gross Profit was 42.369 + 46.04 + 43.086 + 33.049 = $164.5 Mil.
Total Current Assets was $121.5 Mil.
Total Assets was $443.8 Mil.
Property, Plant and Equipment(Net PPE) was $38.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $20.3 Mil.
Selling, General & Admin. Expense(SGA) was $137.1 Mil.
Total Current Liabilities was $39.2 Mil.
Long-Term Debt was $230.0 Mil.
Net Income was -27.305 + -14.731 + -13.944 + -6.565 = $-62.5 Mil.
Non Operating Income was -0.179 + -0.091 + -0.122 + -0.001 = $-0.4 Mil.
Cash Flow from Operations was -22.461 + -7.576 + -3.403 + -1.111 = $-34.6 Mil.
|Accounts Receivable was $27.7 Mil.
Revenue was 39.614 + 41.92 + 39.763 + 39.453 = $160.8 Mil.
Gross Profit was 29.28 + 31.561 + 29.71 + 28.828 = $119.4 Mil.
Total Current Assets was $162.3 Mil.
Total Assets was $212.0 Mil.
Property, Plant and Equipment(Net PPE) was $28.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $10.6 Mil.
Selling, General & Admin. Expense(SGA) was $96.7 Mil.
Total Current Liabilities was $19.8 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)|
|=||(38.831 / 222.722)||/||(27.652 / 160.75)|
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)|
|=||(46.04 / 160.75)||/||(42.369 / 222.722)|
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 - (121.52 + 38.26) / 443.789)||/||(1 - (162.28 + 28.747) / 211.957)|
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))|
|=||(10.581 / (10.581 + 28.747))||/||(20.348 / (20.348 + 38.26))|
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)|
|=||(137.06 / 222.722)||/||(96.689 / 160.75)|
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)|
|=||((230 + 39.207) / 443.789)||/||((0 + 19.809) / 211.957)|
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|
|=||(-62.545 - -0.393||-||-34.551)||/||443.789|
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 -2.02 signals that the company is likely to 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