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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 -1.53. The lowest was -3.43. And the median was -3.02.
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 * 1.124||+||0.528 * 0.9841||+||0.404 * 1.8012||+||0.892 * 1.1439||+||0.115 * 1.1177|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.961||+||4.679 * -0.2431||-||0.327 * 0.9494|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $2.4 Mil.|
Revenue was 31.914 + 31.274 + 30.295 + 29.137 = $122.6 Mil.
Gross Profit was 21.913 + 21.689 + 20.574 + 19.877 = $84.1 Mil.
Total Current Assets was $69.6 Mil.
Total Assets was $131.8 Mil.
Property, Plant and Equipment(Net PPE) was $25.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.5 Mil.
Selling, General & Admin. Expense(SGA) was $67.7 Mil.
Total Current Liabilities was $93.3 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -5.133 + -0.699 + -2.536 + -0.982 = $-9.4 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 8.091 + 3.987 + 3.276 + 7.324 = $22.7 Mil.
|Accounts Receivable was $1.9 Mil.
Revenue was 28.787 + 27.683 + 26.216 + 24.508 = $107.2 Mil.
Gross Profit was 20.098 + 18.784 + 17.761 + 15.67 = $72.3 Mil.
Total Current Assets was $70.4 Mil.
Total Assets was $109.2 Mil.
Property, Plant and Equipment(Net PPE) was $22.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.6 Mil.
Selling, General & Admin. Expense(SGA) was $61.6 Mil.
Total Current Liabilities was $81.5 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)|
|=||(2.412 / 122.62)||/||(1.876 / 107.194)|
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)|
|=||(21.689 / 107.194)||/||(21.913 / 122.62)|
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 - (69.579 + 25.944) / 131.754)||/||(1 - (70.384 + 22.111) / 109.161)|
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))|
|=||(12.59 / (12.59 + 22.111))||/||(12.469 / (12.469 + 25.944))|
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)|
|=||(67.744 / 122.62)||/||(61.624 / 107.194)|
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 + 93.346) / 131.754)||/||((0 + 81.464) / 109.161)|
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|
|=||(-9.35 - 0||-||22.678)||/||131.754|
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 -3.02 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