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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 1.30. The lowest was -5.01. And the median was -2.88.
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 * 1.1748||+||0.528 * 1.0643||+||0.404 * 0.7813||+||0.892 * 0.9661||+||0.115 * 0.8844|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.866||+||4.679 * -0.1089||-||0.327 * 1.0394|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $174 Mil.|
Revenue was 327.5 + 319.9 + 322.5 + 308.4 = $1,278 Mil.
Gross Profit was 148 + 150.2 + 156.3 + 144.2 = $599 Mil.
Total Current Assets was $474 Mil.
Total Assets was $1,953 Mil.
Property, Plant and Equipment(Net PPE) was $875 Mil.
Depreciation, Depletion and Amortization(DDA) was $211 Mil.
Selling, General & Admin. Expense(SGA) was $231 Mil.
Total Current Liabilities was $424 Mil.
Long-Term Debt was $1,887 Mil.
Net Income was -27.3 + 114.2 + 7 + -28.1 = $66 Mil.
Non Operating Income was -19.2 + 190.3 + -0.1 + -32.3 = $139 Mil.
Cash Flow from Operations was 27 + 56 + 37.8 + 19 = $140 Mil.
|Accounts Receivable was $153 Mil.
Revenue was 310.8 + 312 + 325.7 + 374.7 = $1,323 Mil.
Gross Profit was 151.4 + 154.4 + 163.9 + 189.9 = $660 Mil.
Total Current Assets was $650 Mil.
Total Assets was $2,552 Mil.
Property, Plant and Equipment(Net PPE) was $893 Mil.
Depreciation, Depletion and Amortization(DDA) was $185 Mil.
Selling, General & Admin. Expense(SGA) was $276 Mil.
Total Current Liabilities was $798 Mil.
Long-Term Debt was $2,108 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)|
|=||(174.1 / 1278.3)||/||(153.4 / 1323.2)|
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)|
|=||(150.2 / 1323.2)||/||(148 / 1278.3)|
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 - (474.2 + 875.2) / 1952.6)||/||(1 - (650.3 + 892.5) / 2551.7)|
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))|
|=||(184.8 / (184.8 + 892.5))||/||(210.6 / (210.6 + 875.2))|
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)|
|=||(230.5 / 1278.3)||/||(275.5 / 1323.2)|
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)|
|=||((1887 + 424.1) / 1952.6)||/||((2108.2 + 797.5) / 2551.7)|
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|
|=||(65.8 - 138.7||-||139.8)||/||1952.6|
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 -2.92 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