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GuruFocus has detected 3 Warning Signs with Vonage Holdings Corp $VG.
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Vonage Holdings Corp (NYSE:VG)
Beneish M-Score
-2.32 (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.

Vonage Holdings Corp has a M-score of -2.32 suggests that the company is not a manipulator.

VG' s Beneish M-Score Range Over the Past 10 Years
Min: -5.34   Max: 0.99
Current: -2.32

-5.34
0.99

During the past 13 years, the highest Beneish M-Score of Vonage Holdings Corp was 0.99. The lowest was -5.34. And the median was -2.98.


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 Vonage 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 * 1.4294+0.528 * 1.0752+0.404 * 1.0969+0.892 * 1.0776+0.115 * 0.9024
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9494+4.679 * -0.0751-0.327 * 1.098
=-2.32

* 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 $32.1 Mil.
Revenue was 243.347 + 246.763 + 248.359 + 233.675 = $972.1 Mil.
Gross Profit was 148.458 + 150.227 + 152.391 + 149.245 = $600.3 Mil.
Total Current Assets was $94.8 Mil.
Total Assets was $934.1 Mil.
Property, Plant and Equipment(Net PPE) was $45.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $73.3 Mil.
Selling, General & Admin. Expense(SGA) was $465.0 Mil.
Total Current Liabilities was $173.8 Mil.
Long-Term Debt was $310.6 Mil.
Net Income was 5.913 + 0.001 + 9.078 + 0.897 = $15.9 Mil.
Non Operating Income was -0.22 + -0.109 + -0.495 + 0.104 = $-0.7 Mil.
Cash Flow from Operations was 17.261 + 21.757 + 26.694 + 21.093 = $86.8 Mil.
Accounts Receivable was $20.8 Mil.
Revenue was 226.824 + 230.124 + 223.36 + 221.858 = $902.2 Mil.
Gross Profit was 148.608 + 153.014 + 147.961 + 149.432 = $599.0 Mil.
Total Current Assets was $117.4 Mil.
Total Assets was $750.9 Mil.
Property, Plant and Equipment(Net PPE) was $51.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $64.9 Mil.
Selling, General & Admin. Expense(SGA) was $454.5 Mil.
Total Current Liabilities was $170.7 Mil.
Long-Term Debt was $184.0 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)
=(32.108 / 972.144) / (20.846 / 902.166)
=0.03302803 / 0.02310661
=1.4294

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)
=(599.015 / 902.166) / (600.321 / 972.144)
=0.66397426 / 0.61752271
=1.0752

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 - (94.827 + 45.722) / 934.126) / (1 - (117.436 + 51.881) / 750.933)
=0.84953957 / 0.77452449
=1.0969

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
=972.144 / 902.166
=1.0776

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))
=(64.867 / (64.867 + 51.881)) / (73.253 / (73.253 + 45.722))
=0.55561551 / 0.61570078
=0.9024

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)
=(465.019 / 972.144) / (454.522 / 902.166)
=0.47834374 / 0.50381194
=0.9494

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)
=((310.622 + 173.833) / 934.126) / ((184.014 + 170.676) / 750.933)
=0.51861847 / 0.47233242
=1.098

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
=(15.889 - -0.72 - 86.805) / 934.126
=-0.0751

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.

Vonage Holdings Corp has a M-score of -2.32 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.

Vonage Holdings Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.89120.80990.86121.01481.19451.17150.98570.8661.0841.7257
GMI 0.84320.950.97221.02740.97151.04940.97030.96651.03341.0652
AQI 3.2811.49660.98070.61972.9950.90571.13381.11551.00931.1012
SGI 1.36361.08680.98770.99550.98340.97560.97641.0481.03021.0676
DEPI 0.64170.76760.89210.92341.13870.99360.86940.80270.91470.9288
SGAI 0.8570.68150.90440.891.02120.99821.07651.00330.93890.931
LVGI 1.43771.12750.99851.28070.31630.87971.15231.0351.01921.0591
TATA 0.0081-0.1108-0.1147-0.56640.4862-0.152-0.0931-0.1072-0.1354-0.0731
M-score -1.54-2.94-3.17-5.340.99-3.03-2.99-3.07-2.99-2.03

Vonage Holdings Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.8661.04831.12061.01191.0840.94421.35631.37421.72571.4294
GMI 0.96650.96790.97130.98331.03341.03791.04641.05471.06521.0752
AQI 1.11551.02651.05391.08011.00931.05511.10361.07761.10121.0969
SGI 1.0481.03231.01871.01611.03021.03951.04961.06771.06761.0776
DEPI 0.80270.85620.90390.95950.91470.96190.97530.93150.92880.9024
SGAI 1.00330.9730.96550.98180.93890.95240.97650.94880.9310.9494
LVGI 1.0351.11141.08151.18491.01920.99051.17821.03431.05911.098
TATA -0.1072-0.1035-0.1136-0.1125-0.1354-0.1508-0.111-0.0938-0.0731-0.0751
M-score -3.07-2.95-2.91-3.02-2.99-3.15-2.62-2.46-2.03-2.32
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