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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 -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 * 1.3347||+||0.528 * 0.9785||+||0.404 * 2.0217||+||0.892 * 1.1169||+||0.115 * 0.915|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2205||+||4.679 * -0.303||-||0.327 * 1.0781|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $3.5 Mil.|
Revenue was 34.553 + 33.972 + 33.026 + 31.914 = $133.5 Mil.
Gross Profit was 24.779 + 24.172 + 23.012 + 21.913 = $93.9 Mil.
Total Current Assets was $70.0 Mil.
Total Assets was $128.0 Mil.
Property, Plant and Equipment(Net PPE) was $23.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $13.4 Mil.
Selling, General & Admin. Expense(SGA) was $85.6 Mil.
Total Current Liabilities was $98.5 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -5.966 + -4.82 + -6.23 + -5.133 = $-22.1 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 1.993 + 3.976 + 2.571 + 8.091 = $16.6 Mil.
|Accounts Receivable was $2.4 Mil.
Revenue was 31.274 + 30.295 + 29.137 + 28.787 = $119.5 Mil.
Gross Profit was 21.689 + 20.574 + 19.877 + 20.098 = $82.2 Mil.
Total Current Assets was $79.2 Mil.
Total Assets was $120.6 Mil.
Property, Plant and Equipment(Net PPE) was $25.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.5 Mil.
Selling, General & Admin. Expense(SGA) was $62.8 Mil.
Total Current Liabilities was $86.1 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)|
|=||(3.533 / 133.465)||/||(2.37 / 119.493)|
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)|
|=||(24.172 / 119.493)||/||(24.779 / 133.465)|
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 - (70.025 + 23.887) / 128)||/||(1 - (79.168 + 25.549) / 120.604)|
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))|
|=||(12.506 / (12.506 + 25.549))||/||(13.388 / (13.388 + 23.887))|
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)|
|=||(85.619 / 133.465)||/||(62.805 / 119.493)|
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 + 98.482) / 128)||/||((0 + 86.066) / 120.604)|
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|
|=||(-22.149 - 0||-||16.631)||/||128|
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 -3.16 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