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GuruFocus has detected 3 Warning Signs with MarketAxess Holdings Inc $MKTX.
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MarketAxess Holdings Inc (NAS:MKTX)
Beneish M-Score
-2.69 (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.

MarketAxess Holdings Inc has a M-score of -2.69 suggests that the company is not a manipulator.

MKTX' s Beneish M-Score Range Over the Past 10 Years
Min: -3.32   Max: -1.64
Current: -2.69

-3.32
-1.64

During the past 13 years, the highest Beneish M-Score of MarketAxess Holdings Inc was -1.64. The lowest was -3.32. And the median was -2.65.


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 MarketAxess 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 * 0.8776+0.528 * 1+0.404 * 0.7307+0.892 * 1.2234+0.115 * 1.0639
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9438+4.679 * -0.0451-0.327 * 0.9939
=-2.69

* 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 $56.6 Mil.
Revenue was 103.891 + 94.436 + 90.271 + 96.639 = $385.2 Mil.
Gross Profit was 103.891 + 94.436 + 90.271 + 96.639 = $385.2 Mil.
Total Current Assets was $426.7 Mil.
Total Assets was $530.7 Mil.
Property, Plant and Equipment(Net PPE) was $33.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.9 Mil.
Selling, General & Admin. Expense(SGA) was $164.5 Mil.
Total Current Liabilities was $48.4 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 42.463 + 33.165 + 30.918 + 33.126 = $139.7 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 30.549 + 56.315 + 52.643 + 24.074 = $163.6 Mil.
Accounts Receivable was $52.8 Mil.
Revenue was 88.573 + 76.644 + 74.192 + 75.491 = $314.9 Mil.
Gross Profit was 88.573 + 76.644 + 74.192 + 75.491 = $314.9 Mil.
Total Current Assets was $338.0 Mil.
Total Assets was $451.8 Mil.
Property, Plant and Equipment(Net PPE) was $32.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.6 Mil.
Selling, General & Admin. Expense(SGA) was $142.5 Mil.
Total Current Liabilities was $41.4 Mil.
Long-Term Debt was $0.0 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)
=(56.642 / 385.237) / (52.755 / 314.9)
=0.14703157 / 0.16752937
=0.8776

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)
=(314.9 / 314.9) / (385.237 / 385.237)
=1 / 1
=1

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 - (426.65 + 33.888) / 530.714) / (1 - (337.976 + 32.094) / 451.842)
=0.13222941 / 0.18097477
=0.7307

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
=385.237 / 314.9
=1.2234

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))
=(18.611 / (18.611 + 32.094)) / (17.85 / (17.85 + 33.888))
=0.36704467 / 0.34500754
=1.0639

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)
=(164.548 / 385.237) / (142.521 / 314.9)
=0.42713447 / 0.4525913
=0.9438

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)
=((0 + 48.359) / 530.714) / ((0 + 41.426) / 451.842)
=0.09112064 / 0.09168249
=0.9939

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
=(139.672 - 0 - 163.581) / 530.714
=-0.0451

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.

MarketAxess Holdings Inc has a M-score of -2.69 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.

MarketAxess Holdings Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.72631.41760.86821.19820.75830.89660.89991.03671.0261
GMI 12.34220.69540.61411111
AQI 1.3820.72860.86820.57831.47132.21620.52530.79280.816
SGI 0.9941.22941.27781.17541.13191.22721.10071.15351.2205
DEPI 1.01331.40781.48061.05271.01761.09990.81350.93491.029
SGAI 1.98630.13512.11732.22931.03050.96190.98230.93390.9622
LVGI 0.72611.25251.05520.91361.25230.92750.97720.91551.0328
TATA -0.0801-0.0982-0.1092-0.0509-0.0769-0.042-0.0925-0.0550.0869
M-score -3.04-1.64-3.23-2.93-2.84-2.04-3.12-2.62-1.93

MarketAxess Holdings Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.89991.06071.00071.13791.03671.00441.14240.96721.02610.8776
GMI 1111111111
AQI 0.52530.88990.90940.86180.79280.87640.82840.85570.8160.7307
SGI 1.10071.11131.1471.17221.15351.14031.17221.18711.22051.2234
DEPI 0.81350.83530.85740.90990.93490.99240.98950.99661.0291.0639
SGAI 0.98230.94950.90760.90480.93390.96920.97660.97880.96220.9438
LVGI 0.97721.1071.03591.02040.91551.02040.87630.97611.03280.9939
TATA -0.0925-0.0737-0.0656-0.0589-0.0550.09510.12230.09890.0869-0.0451
M-score -3.12-2.76-2.70-2.53-2.62-1.96-1.65-1.93-1.93-2.69
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