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GuruFocus has detected 4 Warning Signs with Cincinnati Bell Inc $CBB.
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Cincinnati Bell Inc (NYSE:CBB)
Beneish M-Score
-3.06 (As of Today)

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 -3.06 suggests that the company is not a manipulator.

CBB' s Beneish M-Score Range Over the Past 10 Years
Min: -11.25   Max: 0.57
Current: -3.06

-11.25
0.57

During the past 13 years, the highest Beneish M-Score of Cincinnati Bell Inc was 0.57. The lowest was -11.25. And the median was -2.99.


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 * 1.1355+0.528 * 0.996+0.404 * 0.7645+0.892 * 1.0154+0.115 * 1.0336
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9768+4.679 * -0.1406-0.327 * 0.9054
=-3.06

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $179 Mil.
Revenue was 285.3 + 312.4 + 299.2 + 288.9 = $1,186 Mil.
Gross Profit was 123.7 + 128.6 + 128.4 + 126.2 = $507 Mil.
Total Current Assets was $230 Mil.
Total Assets was $1,541 Mil.
Property, Plant and Equipment(Net PPE) was $1,086 Mil.
Depreciation, Depletion and Amortization(DDA) was $182 Mil.
Selling, General & Admin. Expense(SGA) was $219 Mil.
Total Current Liabilities was $233 Mil.
Long-Term Debt was $1,199 Mil.
Net Income was -1.3 + 18.8 + 77.6 + 7 = $102 Mil.
Non Operating Income was 6.7 + 22 + 114.5 + 2.4 = $146 Mil.
Cash Flow from Operations was 31.5 + 43.6 + 32.1 + 66 = $173 Mil.
Accounts Receivable was $155 Mil.
Revenue was 289.3 + 299.8 + 285.8 + 292.9 = $1,168 Mil.
Gross Profit was 122.7 + 124.2 + 123.6 + 126.7 = $497 Mil.
Total Current Assets was $200 Mil.
Total Assets was $1,454 Mil.
Property, Plant and Equipment(Net PPE) was $976 Mil.
Depreciation, Depletion and Amortization(DDA) was $170 Mil.
Selling, General & Admin. Expense(SGA) was $221 Mil.
Total Current Liabilities was $259 Mil.
Long-Term Debt was $1,234 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)
=(178.6 / 1185.8) / (154.9 / 1167.8)
=0.15061562 / 0.13264258
=1.1355

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)
=(497.2 / 1167.8) / (506.9 / 1185.8)
=0.42575784 / 0.42747512
=0.996

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 - (229.9 + 1085.5) / 1541) / (1 - (200.4 + 975.5) / 1454.4)
=0.14639844 / 0.1914879
=0.7645

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
=1185.8 / 1167.8
=1.0154

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))
=(170.2 / (170.2 + 975.5)) / (182.2 / (182.2 + 1085.5))
=0.14855547 / 0.14372486
=1.0336

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)
=(218.7 / 1185.8) / (220.5 / 1167.8)
=0.18443245 / 0.18881658
=0.9768

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)
=((1199.1 + 232.9) / 1541) / ((1233.5 + 259.2) / 1454.4)
=0.92926671 / 1.02633388
=0.9054

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
=(102.1 - 145.6 - 173.2) / 1541
=-0.1406

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 -3.06 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 local exchange's currency.

Cincinnati Bell Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.02670.89811.01831.11770.91711.10060.8581.20770.94811.1355
GMI 1.00851.00720.97550.9941.0451.01541.08251.10411.0390.996
AQI 0.90370.90880.86891.33790.91050.9341.3240.89420.47330.7645
SGI 1.06181.04030.95221.03071.0621.00790.85280.92411.00541.0154
DEPI 1.06931.08261.00341.02970.9971.03510.76170.71641.4861.0336
SGAI 1.02551.03031.01260.95650.91451.01631.15310.83391.0740.9768
LVGI 0.96980.9491.01650.96460.99170.99581.12720.97110.88840.9054
TATA -0.1178-0.1495-0.0802-0.0847-0.0996-0.0648-0.0448-0.147-0.1258-0.1406
M-score -2.97-3.25-2.95-2.58-2.96-2.70-2.87-3.03-3.22-3.06

Cincinnati Bell Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.27061.20770.9960.92020.89960.94810.81911.01291.03811.1355
GMI 1.09181.10411.10361.09511.08021.0391.01741.00630.99410.996
AQI 0.78130.89420.72770.7120.61740.47330.55820.59630.5610.7645
SGI 0.8880.92410.9660.99210.99861.00540.99281.00191.0141.0154
DEPI 0.88440.71640.69730.90341.1271.4861.69281.4281.21381.0336
SGAI 0.86660.83390.94541.01231.01131.0741.08091.02991.02680.9768
LVGI 1.03940.97110.97990.95860.88310.88840.87450.88790.92540.9054
TATA -0.1098-0.147-0.1095-0.1138-0.1557-0.1258-0.2012-0.1718-0.1313-0.1406
M-score -2.89-3.03-3.10-3.16-3.36-3.22-3.66-3.35-3.18-3.06
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