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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 Spectranetics Corp was -0.04. The lowest was -3.93. And the median was -2.25.
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 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 * 1.1898||+||0.528 * 1.0006||+||0.404 * 5.7628||+||0.892 * 1.2903||+||0.115 * 0.8216|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0811||+||4.679 * -0.0433||-||0.327 * 5.4333|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|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 $172.3 Mil.
Total Assets was $467.0 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 $128.0 Mil.
Total Current Liabilities was $41.3 Mil.
Long-Term Debt was $230.0 Mil.
Net Income was -14.731 + -13.944 + -6.565 + -5.661 = $-40.9 Mil.
Non Operating Income was -0.091 + -0.122 + -0.001 + 0.003 = $-0.2 Mil.
Cash Flow from Operations was -7.576 + -3.403 + -1.111 + -8.359 = $-20.4 Mil.
|Accounts Receivable was $26.8 Mil.
Revenue was 41.92 + 39.763 + 39.453 + 37.675 = $158.8 Mil.
Gross Profit was 31.561 + 29.71 + 28.828 + 27.356 = $117.5 Mil.
Total Current Assets was $167.8 Mil.
Total Assets was $217.2 Mil.
Property, Plant and Equipment(Net PPE) was $28.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $10.6 Mil.
Selling, General & Admin. Expense(SGA) was $91.8 Mil.
Total Current Liabilities was $23.2 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)|
|=||(41.09 / 204.914)||/||(26.766 / 158.811)|
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)|
|=||(43.086 / 158.811)||/||(46.04 / 204.914)|
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 - (172.334 + 33.819) / 466.95)||/||(1 - (167.83 + 28.281) / 217.157)|
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))|
|=||(10.61 / (10.61 + 28.281))||/||(16.813 / (16.813 + 33.819))|
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)|
|=||(127.987 / 204.914)||/||(91.75 / 158.811)|
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 + 41.343) / 466.95)||/||((0 + 23.225) / 217.157)|
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|
|=||(-40.901 - -0.211||-||-20.449)||/||466.95|
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.
Spectranetics Corp has a M-score of -1.81 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
Spectranetics Corp Annual Data
Spectranetics Corp Quarterly Data