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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.
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.
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|
|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
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)|
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)|
|=||(144.2 / 183.7)||/||(156.3 / 1253.7)|
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 - (273.4 + 892.2) / 2101.5)||/||(1 - (229.5 + 873.1) / 2151.5)|
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))|
|=||(72.9 / (72.9 + 873.1))||/||(165.9 / (165.9 + 892.2))|
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)|
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)|
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|
|=||(-11 - -37.5||-||74.3)||/||2101.5|
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.
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