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GuruFocus has detected 3 Warning Signs with ExlService Holdings Inc $EXLS.
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ExlService Holdings Inc (NAS:EXLS)
Beneish M-Score
-2.81 (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.

ExlService Holdings Inc has a M-score of -2.81 suggests that the company is not a manipulator.

EXLS' s Beneish M-Score Range Over the Past 10 Years
Min: -3.31   Max: -0.72
Current: -2.81

-3.31
-0.72

During the past 13 years, the highest Beneish M-Score of ExlService Holdings Inc was -0.72. The lowest was -3.31. And the median was -2.57.


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 ExlService Holdings Inc 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 * 1.0342+0.528 * 1.0391+0.404 * 0.9767+0.892 * 1.0766+0.115 * 1.0772
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0123+4.679 * -0.1035-0.327 * 0.892
=-2.81

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

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $119.8 Mil.
Revenue was 183.033 + 177.274 + 171.2 + 170.478 = $702.0 Mil.
Gross Profit was 62.914 + 61.49 + 59.433 + 58.452 = $242.3 Mil.
Total Current Assets was $383.5 Mil.
Total Assets was $726.7 Mil.
Property, Plant and Equipment(Net PPE) was $59.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $35.9 Mil.
Selling, General & Admin. Expense(SGA) was $142.7 Mil.
Total Current Liabilities was $111.0 Mil.
Long-Term Debt was $35.3 Mil.
Net Income was 16.788 + 15.488 + 16.05 + 16.375 = $64.7 Mil.
Non Operating Income was 4.206 + 10.961 + 1.716 + 5.229 = $22.1 Mil.
Cash Flow from Operations was 7.073 + 44.216 + 29.127 + 37.356 = $117.8 Mil.
Accounts Receivable was $107.6 Mil.
Revenue was 167.036 + 165.858 + 163.503 + 155.621 = $652.0 Mil.
Gross Profit was 58.657 + 59.742 + 60.305 + 55.143 = $233.8 Mil.
Total Current Assets was $337.8 Mil.
Total Assets was $642.3 Mil.
Property, Plant and Equipment(Net PPE) was $47.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $32.5 Mil.
Selling, General & Admin. Expense(SGA) was $131.0 Mil.
Total Current Liabilities was $89.6 Mil.
Long-Term Debt was $55.3 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)
=(119.811 / 701.985) / (107.601 / 652.018)
=0.17067459 / 0.16502765
=1.0342

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)
=(233.847 / 652.018) / (242.289 / 701.985)
=0.35865114 / 0.3451484
=1.0391

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 - (383.498 + 59.22) / 726.693) / (1 - (337.754 + 47.54) / 642.28)
=0.39077712 / 0.40011521
=0.9767

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
=701.985 / 652.018
=1.0766

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))
=(32.545 / (32.545 + 47.54)) / (35.873 / (35.873 + 59.22))
=0.40638072 / 0.37724123
=1.0772

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)
=(142.744 / 701.985) / (130.975 / 652.018)
=0.20334338 / 0.20087636
=1.0123

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)
=((35.285 + 110.97) / 726.693) / ((55.278 + 89.644) / 642.28)
=0.20126106 / 0.22563679
=0.892

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
=(64.701 - 22.112 - 117.772) / 726.693
=-0.1035

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.

ExlService Holdings Inc has a M-score of -2.81 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.

ExlService Holdings Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.9040.89171.01890.95790.88331.05920.97281.01020.91721.1181
GMI 1.34210.9890.8961.06431.02981.00950.98541.17350.93051.0344
AQI 1.10630.98021.37421.64871.41040.97990.87061.05561.0090.9738
SGI 1.58840.97321.01471.32331.42651.22851.08021.04351.25881.0915
DEPI 0.7651.21520.96981.02970.88950.89280.94131.0970.96430.9575
SGAI 1.25071.12951.06090.97530.90420.94170.9991.0540.96211.0063
LVGI 0.88840.92250.83221.08481.21230.8720.94571.47661.04220.878
TATA -0.0185-0.0514-0.0565-0.0462-0.0658-0.0492-0.064-0.0601-0.0799-0.0844
M-score -1.94-2.83-2.58-2.17-2.40-2.42-2.78-2.75-2.74-2.64

ExlService Holdings Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.01021.0681.11991.060.91720.96260.98720.98391.11811.0342
GMI 1.17351.20881.14591.02140.93050.91120.94381.00151.03441.0391
AQI 1.05561.19311.21181.16321.0090.91070.91080.93180.97380.9767
SGI 1.04351.07591.14121.2251.25881.25151.19751.12821.09151.0766
DEPI 1.0970.95470.91740.91830.96430.92770.96860.98440.95751.0772
SGAI 1.0541.06321.02831.00830.96210.95570.96110.98071.00631.0123
LVGI 1.47661.95321.77071.64851.04220.85990.82950.83030.8780.892
TATA -0.0601-0.0541-0.0559-0.0572-0.0799-0.0609-0.076-0.077-0.0844-0.1035
M-score -2.75-2.74-2.61-2.64-2.74-2.61-2.68-2.71-2.64-2.81
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