Switch to:
GuruFocus has detected 2 Warning Signs with EarthLink Holdings Corp $ELNK.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
EarthLink Holdings Corp (NAS:ELNK)
Beneish M-Score
-3.29 (As of Today)

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.

EarthLink Holdings Corp has a M-score of -3.29 suggests that the company is not a manipulator.

ELNK' s Beneish M-Score Range Over the Past 10 Years
Min: -5.97   Max: 1.09
Current: -3.29

-5.97
1.09

During the past 13 years, the highest Beneish M-Score of EarthLink Holdings Corp was 1.09. The lowest was -5.97. And the median was -2.91.


Definition

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 EarthLink Holdings 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 * 1.1743+0.528 * 1.009+0.404 * 1.0304+0.892 * 0.8748+0.115 * 1.1579
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9896+4.679 * -0.1929-0.327 * 0.9876
=-3.29

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $76.8 Mil.
Revenue was 230.13 + 235.125 + 240.357 + 254.262 = $959.9 Mil.
Gross Profit was 123.202 + 125.585 + 129.423 + 139.056 = $517.3 Mil.
Total Current Assets was $151.0 Mil.
Total Assets was $635.6 Mil.
Property, Plant and Equipment(Net PPE) was $331.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $135.2 Mil.
Selling, General & Admin. Expense(SGA) was $319.2 Mil.
Total Current Liabilities was $148.6 Mil.
Long-Term Debt was $437.5 Mil.
Net Income was -4.532 + 0.23 + 4.115 + 7.867 = $7.7 Mil.
Non Operating Income was 0.051 + -0.964 + -0.226 + 5.495 = $4.4 Mil.
Cash Flow from Operations was 27.505 + 47.522 + 40.308 + 10.63 = $126.0 Mil.
Accounts Receivable was $74.7 Mil.
Revenue was 260.237 + 270.904 + 283.664 + 282.447 = $1,097.3 Mil.
Gross Profit was 138.51 + 148.513 + 156.616 + 152.985 = $596.6 Mil.
Total Current Assets was $189.9 Mil.
Total Assets was $734.7 Mil.
Property, Plant and Equipment(Net PPE) was $372.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $188.3 Mil.
Selling, General & Admin. Expense(SGA) was $368.8 Mil.
Total Current Liabilities was $180.3 Mil.
Long-Term Debt was $505.6 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(76.765 / 959.874) / (74.724 / 1097.252)
=0.07997404 / 0.06810104
=1.1743

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(596.624 / 1097.252) / (517.266 / 959.874)
=0.54374383 / 0.53888948
=1.009

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (150.993 + 331.119) / 635.646) / (1 - (189.931 + 372.504) / 734.652)
=0.2415401 / 0.23441983
=1.0304

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=959.874 / 1097.252
=0.8748

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))
=(188.315 / (188.315 + 372.504)) / (135.248 / (135.248 + 331.119))
=0.3357857 / 0.29000337
=1.1579

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)
=(319.231 / 959.874) / (368.763 / 1097.252)
=0.33257594 / 0.33607868
=0.9896

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)
=((437.458 + 148.633) / 635.646) / ((505.613 + 180.295) / 734.652)
=0.92203994 / 0.93365022
=0.9876

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(7.68 - 4.356 - 125.965) / 635.646
=-0.1929

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.

EarthLink Holdings Corp has a M-score of -3.29 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

EarthLink Holdings Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.86980.93730.8883.40660.91180.95480.96430.96860.86541.1743
GMI 1.12241.02640.98321.01611.12631.05221.01910.97990.9681.009
AQI 1.08440.63460.81121.63811.30470.99530.62680.83820.87721.0304
SGI 0.93420.78620.75740.85972.09021.02910.92690.94860.93230.8748
DEPI 0.66650.98411.24.65350.30370.95711.03230.93280.94071.1579
SGAI 0.79520.66710.8920.9341.06611.0541.06591.03670.94390.9896
LVGI 1.20380.66690.74271.62481.07971.00161.5261.10041.04950.9876
TATA -0.1457-0.06470.0743-0.0485-0.0662-0.114-0.6558-0.2367-0.2721-0.1929
M-score -3.31-3.00-2.41-0.12-1.83-3.02-5.97-3.79-4.02-3.29

EarthLink Holdings Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.04220.96860.97140.85520.83640.86540.92330.95230.96961.1743
GMI 1.00920.97990.96140.94630.95050.9680.98051.00411.01261.009
AQI 0.62130.83820.87650.87960.90430.87720.85080.83540.95351.0304
SGI 0.94220.94860.95160.95290.93910.93230.920.89330.88270.8748
DEPI 0.93570.93280.94160.93980.92670.94070.94461.00151.06931.1579
SGAI 1.04411.03671.0060.98030.96340.94390.9460.95040.96520.9896
LVGI 1.36991.10041.08121.05621.06141.04951.01561.0060.99330.9876
TATA -0.4943-0.2367-0.2255-0.2383-0.2714-0.2721-0.2718-0.27-0.2225-0.1929
M-score -5.09-3.79-3.71-3.87-4.04-4.02-3.97-3.94-3.65-3.29
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GF Chat

{{numOfNotice}}
FEEDBACK