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

Warning Sign:

Beneish M-Score 2.45 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 2.45 signals that the company is a manipulator.

CBB' s 10-Year Beneish M-Score Range
Min: -5.01   Max: 10.17
Current: 2.45

-5.01
10.17

During the past 13 years, the highest Beneish M-Score of Cincinnati Bell Inc was 10.17. The lowest was -5.01. And the median was -2.84.


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 * 0.166+0.528 * 2.1061+0.404 * 0.9135+0.892 * 6.8247+0.115 * 0.4915
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.2382+4.679 * -0.0227-0.327 * 1.0487
=2.45

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $177 Mil.
Revenue was 322.5 + 308.4 + 310.8 + 312 = $1,254 Mil.
Gross Profit was 156.3 + 144.2 + 151.4 + 154.4 = $606 Mil.
Total Current Assets was $273 Mil.
Total Assets was $2,102 Mil.
Property, Plant and Equipment(Net PPE) was $892 Mil.
Depreciation, Depletion and Amortization(DDA) was $166 Mil.
Selling, General & Admin. Expense(SGA) was $232 Mil.
Total Current Liabilities was $266 Mil.
Long-Term Debt was $2,244 Mil.
Net Income was 7 + -28.1 + 9.3 + 0.8 = $-11 Mil.
Non Operating Income was -0.1 + -32.3 + -0.3 + -4.8 = $-38 Mil.
Cash Flow from Operations was 37.8 + 19 + 30.4 + -12.9 = $74 Mil.
Accounts Receivable was $156 Mil.
Revenue was 325.7 + -878.4 + 368.2 + 368.2 = $184 Mil.
Gross Profit was 163.3 + -368.6 + 195.9 + 196.5 = $187 Mil.
Total Current Assets was $230 Mil.
Total Assets was $2,152 Mil.
Property, Plant and Equipment(Net PPE) was $873 Mil.
Depreciation, Depletion and Amortization(DDA) was $73 Mil.
Selling, General & Admin. Expense(SGA) was $143 Mil.
Total Current Liabilities was $323 Mil.
Long-Term Debt was $2,127 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)
=(177 / 1253.7) / (156.2 / 183.7)
=0.1411821 / 0.8502994
=0.166

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)
=(144.2 / 183.7) / (156.3 / 1253.7)
=1.01850844 / 0.48360852
=2.1061

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 - (273.4 + 892.2) / 2101.5) / (1 - (229.5 + 873.1) / 2151.5)
=0.44534856 / 0.48752033
=0.9135

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
=1253.7 / 183.7
=6.8247

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))
=(72.9 / (72.9 + 873.1)) / (165.9 / (165.9 + 892.2))
=0.07706131 / 0.15679047
=0.4915

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)
=(232.1 / 1253.7) / (142.8 / 183.7)
=0.18513201 / 0.77735438
=0.2382

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)
=((2244.1 + 265.7) / 2101.5) / ((2127.4 + 322.9) / 2151.5)
=1.19428979 / 1.13887985
=1.0487

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
=(-11 - -37.5 - 74.3) / 2101.5
=-0.0227

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 2.45 signals that the company is likely to 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.27681.15520.95831.02670.89811.01831.11770.91711.22570.8191
GMI 0.93571.04291.04331.00851.00720.97550.9941.0450.53692.0474
AQI 0.98050.9541.01930.90370.90880.86891.33790.91051.01121.2229
SGI 0.77491.00211.051.06181.04030.95221.03071.0620.1515.6925
DEPI 0.88461.00221.2051.06931.08261.00341.02970.9971.32550.5948
SGAI 0.83180.9691.05231.02551.03031.01260.95650.91452.96550.3952
LVGI 0.99221.02610.93860.96980.9491.01650.96460.99170.50652.2162
TATA -0.1229-0.1339-0.1258-0.1178-0.1495-0.0802-0.0847-0.0996-0.0535-0.0448
M-score -3.02-2.96-3.00-2.97-3.25-2.95-2.58-2.96-3.661.63

Cincinnati Bell Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.91711.02631.06591.08171.22577.07499.21417.39890.81910.166
GMI 1.0451.04061.03061.00970.53690.52330.46720.37162.04942.1061
AQI 0.91050.92620.91620.9341.01121.33011.36861.13771.22290.9135
SGI 1.0621.03561.01531.00320.1510.12540.0870.04795.69256.8247
DEPI 0.9971.0341.06091.03221.32551.61122.04622.83180.59480.4915
SGAI 0.91450.94480.9540.99992.96554.33666.28849.56450.39520.2382
LVGI 0.99170.99151.00251.00360.50651.07411.07881.0752.21621.0487
TATA -0.0996-0.0876-0.0952-0.092-0.0535-0.0617-0.0235-0.0047-0.0448-0.0227
M-score -2.96-2.83-2.85-2.85-3.661.393.2110.171.632.45
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