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Cincinnati Bell Inc (NYSE:CBB)
Beneish M-Score
12.55 (As of Today)

Warning Sign:

Beneish M-Score 12.55 higher than -2.22, which implies that it might have manipulated its financial results.

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.

Cincinnati Bell Inc has a M-score of -3.14 suggests that the company is not a manipulator.

CBB' s 10-Year Beneish M-Score Range
Min: -5.01   Max: 12.55
Current: 12.55

-5.01
12.55

During the past 13 years, the highest Beneish M-Score of Cincinnati Bell Inc was 12.55. The lowest was -5.01. And the median was -2.83.


Definition

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 * 1.0752+0.528 * 1.0723+0.404 * 0.7575+0.892 * 1.0169+0.115 * 0.7466
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8442+4.679 * -0.1459-0.327 * 1.0074
=-3.14

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $162 Mil.
Revenue was 308.3 + 327.5 + 319.9 + 322.5 = $1,278 Mil.
Gross Profit was 124.6 + 148 + 150.2 + 156.3 = $579 Mil.
Total Current Assets was $337 Mil.
Total Assets was $1,820 Mil.
Property, Plant and Equipment(Net PPE) was $860 Mil.
Depreciation, Depletion and Amortization(DDA) was $231 Mil.
Selling, General & Admin. Expense(SGA) was $228 Mil.
Total Current Liabilities was $410 Mil.
Long-Term Debt was $1,771 Mil.
Net Income was -18.3 + -27.3 + 114.2 + 7 = $76 Mil.
Non Operating Income was -5.1 + -19.2 + 190.3 + -0.1 = $166 Mil.
Cash Flow from Operations was 54.4 + 27 + 56 + 37.8 = $175 Mil.
Accounts Receivable was $148 Mil.
Revenue was 308.4 + 310.8 + 312 + 325.7 = $1,257 Mil.
Gross Profit was 142.6 + 150.9 + 153.8 + 163.3 = $611 Mil.
Total Current Assets was $251 Mil.
Total Assets was $2,107 Mil.
Property, Plant and Equipment(Net PPE) was $903 Mil.
Depreciation, Depletion and Amortization(DDA) was $170 Mil.
Selling, General & Admin. Expense(SGA) was $265 Mil.
Total Current Liabilities was $254 Mil.
Long-Term Debt was $2,253 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(161.5 / 1278.2) / (147.7 / 1256.9)
=0.12634955 / 0.11751134
=1.0752

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(148 / 1256.9) / (124.6 / 1278.2)
=0.48579839 / 0.45305899
=1.0723

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (336.6 + 859.5) / 1819.7) / (1 - (251.1 + 902.8) / 2107.3)
=0.34269385 / 0.45242728
=0.7575

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=1278.2 / 1256.9
=1.0169

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))
=(169.6 / (169.6 + 902.8)) / (231 / (231 + 859.5))
=0.15814994 / 0.21182944
=0.7466

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)
=(227.5 / 1278.2) / (265 / 1256.9)
=0.17798467 / 0.21083618
=0.8442

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)
=((1771 + 409.8) / 1819.7) / ((2252.6 + 254.3) / 2107.3)
=1.1984393 / 1.18962654
=1.0074

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(75.6 - 165.9 - 175.2) / 1819.7
=-0.1459

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 -3.14 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Cincinnati Bell Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.15520.95831.02670.89811.01831.11770.91711.22570.78151.0752
GMI 1.04291.04331.00851.00720.97550.9941.0450.53692.05851.0723
AQI 0.9541.01930.90370.90880.86891.33790.91051.01121.22290.7575
SGI 1.00211.051.06181.04030.95221.03071.0620.1515.69251.0169
DEPI 1.00221.2051.06931.08261.00341.02970.9971.32550.59480.7466
SGAI 0.9691.05231.02551.03031.01260.95650.91452.96550.39520.8442
LVGI 1.02610.93860.96980.9491.01650.96460.99170.50652.21621.0074
TATA -0.1339-0.1258-0.1178-0.1495-0.0802-0.0847-0.0996-0.0535-0.0448-0.1459
M-score -2.96-3.00-2.97-3.25-2.95-2.58-2.96-3.661.60-3.14

Cincinnati Bell Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.08171.22576.7088.74816.53650.78150.16380.11040.06221.0752
GMI 1.00970.53690.52330.46920.37572.05852.11552.38143.03571.0723
AQI 0.9341.01121.33011.36861.13771.22290.91350.66080.78130.7575
SGI 1.00320.1510.12540.0870.04795.69256.82479.894918.23541.0169
DEPI 1.03221.32551.61122.04622.83180.59480.49150.33930.22540.7466
SGAI 0.99992.96554.33666.28849.56450.39520.23820.15960.10350.8442
LVGI 1.00360.50651.07411.07881.0752.21621.04870.99641.03941.0074
TATA -0.092-0.0535-0.0617-0.0235-0.0047-0.0448-0.0227-0.0911-0.1089-0.1459
M-score -2.85-3.661.062.789.381.602.454.8712.56-3.14
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