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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 2.89. The lowest was -11.56. And the median was -2.99.
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 * 1.0381||+||0.528 * 0.9941||+||0.404 * 0.561||+||0.892 * 1.014||+||0.115 * 1.2138|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.021||+||4.679 * -0.1313||-||0.327 * 0.9254|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $172 Mil.|
Revenue was 312.4 + 299.2 + 288.9 + 289.3 = $1,190 Mil.
Gross Profit was 128.6 + 128.4 + 126.2 + 122.7 = $506 Mil.
Total Current Assets was $314 Mil.
Total Assets was $1,530 Mil.
Property, Plant and Equipment(Net PPE) was $1,053 Mil.
Depreciation, Depletion and Amortization(DDA) was $174 Mil.
Selling, General & Admin. Expense(SGA) was $223 Mil.
Total Current Liabilities was $354 Mil.
Long-Term Debt was $1,126 Mil.
Net Income was 18.8 + 77.6 + 7 + 32.6 = $136 Mil.
Non Operating Income was 22 + 114.5 + 2.4 + 40.1 = $179 Mil.
Cash Flow from Operations was 43.6 + 32.1 + 66 + 16.2 = $158 Mil.
|Accounts Receivable was $164 Mil.
Revenue was 299.8 + 285.8 + 292.9 + 294.9 = $1,173 Mil.
Gross Profit was 124.2 + 123.6 + 126.7 + 121.5 = $496 Mil.
Total Current Assets was $251 Mil.
Total Assets was $1,460 Mil.
Property, Plant and Equipment(Net PPE) was $930 Mil.
Depreciation, Depletion and Amortization(DDA) was $193 Mil.
Selling, General & Admin. Expense(SGA) was $215 Mil.
Total Current Liabilities was $290 Mil.
Long-Term Debt was $1,236 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)|
|=||(172.2 / 1189.8)||/||(163.6 / 1173.4)|
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)|
|=||(496 / 1173.4)||/||(505.9 / 1189.8)|
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 - (313.6 + 1052.6) / 1529.9)||/||(1 - (251.3 + 930.4) / 1460.2)|
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))|
|=||(193.4 / (193.4 + 930.4))||/||(173.9 / (173.9 + 1052.6))|
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)|
|=||(222.9 / 1189.8)||/||(215.3 / 1173.4)|
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)|
|=||((1125.5 + 354.3) / 1529.9)||/||((1236.3 + 289.9) / 1460.2)|
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|
|=||(136 - 179||-||157.9)||/||1529.9|
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 -3.18 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