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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 3.33. The lowest was -11.56. And the median was -2.84.
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 * 0.8191||+||0.528 * 1.0174||+||0.404 * 0.5582||+||0.892 * 0.9928||+||0.115 * 1.6928|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0747||+||4.679 * -0.2012||-||0.327 * 0.8745|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $139 Mil.|
Revenue was 288.9 + 289.3 + 299.8 + 285.8 = $1,164 Mil.
Gross Profit was 126.2 + 122.7 + 124.2 + 123.6 = $497 Mil.
Total Current Assets was $188 Mil.
Total Assets was $1,445 Mil.
Property, Plant and Equipment(Net PPE) was $995 Mil.
Depreciation, Depletion and Amortization(DDA) was $152 Mil.
Selling, General & Admin. Expense(SGA) was $222 Mil.
Total Current Liabilities was $253 Mil.
Long-Term Debt was $1,226 Mil.
Net Income was 7 + 32.6 + 80.3 + 191.6 = $312 Mil.
Non Operating Income was 2.4 + 40.1 + 108.7 + 280.4 = $432 Mil.
Cash Flow from Operations was 66 + 16.2 + 62 + 26.4 = $171 Mil.
|Accounts Receivable was $170 Mil.
Revenue was 292.9 + 294.9 + 301.4 + 283 = $1,172 Mil.
Gross Profit was 126.7 + 121.5 + 131.9 + 128.9 = $509 Mil.
Total Current Assets was $326 Mil.
Total Assets was $1,733 Mil.
Property, Plant and Equipment(Net PPE) was $846 Mil.
Depreciation, Depletion and Amortization(DDA) was $245 Mil.
Selling, General & Admin. Expense(SGA) was $208 Mil.
Total Current Liabilities was $279 Mil.
Long-Term Debt was $1,749 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)|
|=||(138.5 / 1163.8)||/||(170.3 / 1172.2)|
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)|
|=||(122.7 / 1172.2)||/||(126.2 / 1163.8)|
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 - (188.3 + 995) / 1444.6)||/||(1 - (325.7 + 845.7) / 1733)|
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))|
|=||(245.3 / (245.3 + 845.7))||/||(152.4 / (152.4 + 995))|
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)|
|=||(221.5 / 1163.8)||/||(207.6 / 1172.2)|
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)|
|=||((1226 + 252.5) / 1444.6)||/||((1748.8 + 279.4) / 1733)|
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|
|=||(311.5 - 431.6||-||170.6)||/||1444.6|
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 -3.66 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