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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.
During the past 6 years, the highest Beneish M-Score of Carbonite Inc was -1.42. The lowest was -3.43. And the median was -2.98.
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 Carbonite 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 * 1.2943||+||0.528 * 0.9929||+||0.404 * 1.7215||+||0.892 * 1.1313||+||0.115 * 1.1033|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1028||+||4.679 * -0.2451||-||0.327 * 0.9604|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $3.1 Mil.|
Revenue was 33.026 + 31.914 + 31.274 + 30.295 = $126.5 Mil.
Gross Profit was 23.012 + 21.913 + 21.689 + 20.574 = $87.2 Mil.
Total Current Assets was $74.8 Mil.
Total Assets was $132.7 Mil.
Property, Plant and Equipment(Net PPE) was $24.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.7 Mil.
Selling, General & Admin. Expense(SGA) was $74.3 Mil.
Total Current Liabilities was $95.5 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -6.23 + -5.133 + -0.699 + -2.536 = $-14.6 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 2.571 + 8.091 + 3.987 + 3.276 = $17.9 Mil.
|Accounts Receivable was $2.1 Mil.
Revenue was 29.137 + 28.787 + 27.683 + 26.216 = $111.8 Mil.
Gross Profit was 19.877 + 20.098 + 18.784 + 17.761 = $76.5 Mil.
Total Current Assets was $75.3 Mil.
Total Assets was $112.7 Mil.
Property, Plant and Equipment(Net PPE) was $21.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.6 Mil.
Selling, General & Admin. Expense(SGA) was $59.6 Mil.
Total Current Liabilities was $84.5 Mil.
Long-Term Debt was $0.0 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(3.141 / 126.509)||/||(2.145 / 111.823)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(21.913 / 111.823)||/||(23.012 / 126.509)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (74.826 + 24.582) / 132.718)||/||(1 - (75.337 + 20.959) / 112.731)|
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.
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))|
|=||(12.587 / (12.587 + 20.959))||/||(12.668 / (12.668 + 24.582))|
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)|
|=||(74.308 / 126.509)||/||(59.558 / 111.823)|
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 + 95.502) / 132.718)||/||((0 + 84.461) / 112.731)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(-14.598 - 0||-||17.925)||/||132.718|
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.
Carbonite Inc has a M-score of -2.94 suggests that the company will not be a manipulator.
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
Carbonite Inc Annual Data
Carbonite Inc Quarterly Data