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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 13 years, the highest Beneish M-Score of Cincinnati Bell Inc was 2.89. The lowest was -4.65. And the median was -2.96.
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 Cincinnati Bell 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 * 0.9581||+||0.528 * 1.039||+||0.404 * 0.4733||+||0.892 * 1.0054||+||0.115 * 1.486|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0677||+||4.679 * -0.1258||-||0.327 * 0.8884|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $155 Mil.|
Revenue was 289.3 + 299.8 + 285.8 + 292.9 = $1,168 Mil.
Gross Profit was 122.7 + 124.2 + 123.6 + 126.7 = $497 Mil.
Total Current Assets was $200 Mil.
Total Assets was $1,454 Mil.
Property, Plant and Equipment(Net PPE) was $976 Mil.
Depreciation, Depletion and Amortization(DDA) was $170 Mil.
Selling, General & Admin. Expense(SGA) was $221 Mil.
Total Current Liabilities was $259 Mil.
Long-Term Debt was $1,234 Mil.
Net Income was 32.6 + 80.3 + 191.6 + 49.2 = $354 Mil.
Non Operating Income was 40.1 + 108.7 + 280.4 + -3.5 = $426 Mil.
Cash Flow from Operations was 16.2 + 62 + 26.4 + 6.3 = $111 Mil.
|Accounts Receivable was $161 Mil.
Revenue was 294.9 + 301.4 + 283 + 282.2 = $1,162 Mil.
Gross Profit was 121.5 + 131.9 + 128.9 + 131.5 = $514 Mil.
Total Current Assets was $269 Mil.
Total Assets was $1,821 Mil.
Property, Plant and Equipment(Net PPE) was $815 Mil.
Depreciation, Depletion and Amortization(DDA) was $231 Mil.
Selling, General & Admin. Expense(SGA) was $205 Mil.
Total Current Liabilities was $411 Mil.
Long-Term Debt was $1,693 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)|
|=||(154.9 / 1167.8)||/||(160.8 / 1161.5)|
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)|
|=||(124.2 / 1161.5)||/||(122.7 / 1167.8)|
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 - (200.4 + 975.5) / 1454.4)||/||(1 - (268.7 + 815.4) / 1820.7)|
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))|
|=||(231 / (231 + 815.4))||/||(170.2 / (170.2 + 975.5))|
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)|
|=||(220.5 / 1167.8)||/||(205.4 / 1161.5)|
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)|
|=||((1233.5 + 259.2) / 1454.4)||/||((1692.6 + 410.8) / 1820.7)|
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|
|=||(353.7 - 425.7||-||110.9)||/||1454.4|
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.
Cincinnati Bell Inc has a M-score of -3.21 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
Cincinnati Bell Inc Annual Data
Cincinnati Bell Inc Quarterly Data