Market Cap : 2.95 B | Enterprise Value : 3.46 B | PE Ratio : | PB Ratio : 4.88 |
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The zones of discrimination for M-Score is as such:
An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator.
An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.
Good Sign:
Beneish M-Score -2.76 no higher than -1.78, which implies that the company is unlikely to be a manipulator.
During the past 13 years, the highest Beneish M-Score of Vonage Holdings was 0.99. The lowest was -5.34. And the median was -2.81.
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
* The bar in red indicates where Vonage Holdings's Beneish M-Score falls into.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski 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 Vonage Holdings 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 * 1.0887 | + | 0.528 * 1.0249 | + | 0.404 * 1.0015 | + | 0.892 * 1.0493 | + | 0.115 * 0.7838 | |
- | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI | |||||||
- | 0.172 * 0.9863 | + | 4.679 * -0.0863 | - | 0.327 * 0.9717 | |||||||
= | -2.76 |
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
This Year (Dec20) TTM: | Last Year (Dec19) TTM: |
Accounts Receivable was $116 Mil. Revenue was 323.295 + 316.649 + 310.533 + 297.457 = $1,248 Mil. Gross Profit was 173.079 + 174.748 + 176.545 + 170.039 = $694 Mil. Total Current Assets was $216 Mil. Total Assets was $1,396 Mil. Property, Plant and Equipment(Net PPE) was $61 Mil. Depreciation, Depletion and Amortization(DDA) was $89 Mil. Selling, General, & Admin. Expense(SGA) was $606 Mil. Total Current Liabilities was $253 Mil. Long-Term Debt & Capital Lease Obligation was $537 Mil. Net Income was -13.965 + -10.062 + -8.43 + -3.755 = $-36 Mil. Non Operating Income was 0.16 + -0.037 + -0.038 + 0.229 = $0 Mil. Cash Flow from Operations was 32.449 + 12.628 + 36.3 + 2.503 = $84 Mil. |
Accounts Receivable was $102 Mil. Revenue was 309.687 + 302.534 + 297.584 + 279.541 = $1,189 Mil. Gross Profit was 174.068 + 168.701 + 169.363 + 166.13 = $678 Mil. Total Current Assets was $173 Mil. Total Assets was $1,365 Mil. Property, Plant and Equipment(Net PPE) was $99 Mil. Depreciation, Depletion and Amortization(DDA) was $86 Mil. Selling, General, & Admin. Expense(SGA) was $585 Mil. Total Current Liabilities was $252 Mil. Long-Term Debt & Capital Lease Obligation was $543 Mil. |
1. DSRI = Days Sales in Receivables Index
Measured as the ratio of Revenue in Accounts Receivable 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) |
= | (116.304 / 1247.934) | / | (101.813 / 1189.346) | |
= | 0.09319724 | / | 0.08560419 | |
= | 1.0887 |
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) | |
= | (678.262 / 1189.346) | / | (694.411 / 1247.934) | |
= | 0.57028148 | / | 0.5564485 | |
= | 1.0249 |
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 Property, Plant and Equipment to Total Assets.
AQI | = | (1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) | / | (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1) |
= | (1 - (215.904 + 60.951) / 1395.836) | / | (1 - (173.068 + 99.218) / 1364.7) | |
= | 0.8016565 | / | 0.80047923 | |
= | 1.0015 |
4. SGI = Sales Growth Index
Ratio of Revenue 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 | |
= | 1247.934 | / | 1189.346 | |
= | 1.0493 |
5. DEPI = Depreciation Index
Measured as the ratio of the rate of Depreciation, Depletion and Amortization 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)) |
= | (86.256 / (86.256 + 99.218)) | / | (88.917 / (88.917 + 60.951)) | |
= | 0.4650571 | / | 0.59330211 | |
= | 0.7838 |
Note: If the Depreciation, Depletion and Amortization data is not available, we assume that the depreciation rate is constant and set the Depreciation Index to 1.
6. SGAI = Sales, General and Administrative expenses Index
The ratio of Selling, General, & Admin. Expense(SGA) to Sales 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) |
= | (605.643 / 1247.934) | / | (585.243 / 1189.346) | |
= | 0.48531653 | / | 0.49207127 | |
= | 0.9863 |
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 in leverage
LVGI | = | ((LTD_t + CurrentLiabilities_t) / TotalAssets_t) | / | ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1) |
= | ((537.303 + 252.604) / 1395.836) | / | ((542.88 + 251.896) / 1364.7) | |
= | 0.56590244 | / | 0.58238148 | |
= | 0.9717 |
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 | |
= | (-36.212 - 0.314 | - | 83.88) | / | 1395.836 | |
= | -0.0863 |
An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator. An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.
Vonage Holdings has a M-score of -2.76 suggests that the company is unlikely to be a manipulator.
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