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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 Cambrex Corp was 0.84. The lowest was -4.72. And the median was -2.68.
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 Cambrex Corp 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 * 0.7976||+||0.528 * 0.8672||+||0.404 * 0.8854||+||0.892 * 1.2477||+||0.115 * 0.9372|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.91||+||4.679 * -0.0151||-||0.327 * 1.0113|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $41.5 Mil.|
Revenue was 77.525 + 129.315 + 81.3 + 97.893 = $386.0 Mil.
Gross Profit was 29.079 + 45.399 + 28.406 + 33.415 = $136.3 Mil.
Total Current Assets was $233.2 Mil.
Total Assets was $481.1 Mil.
Property, Plant and Equipment(Net PPE) was $159.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $23.2 Mil.
Selling, General & Admin. Expense(SGA) was $54.6 Mil.
Total Current Liabilities was $106.2 Mil.
Long-Term Debt was $60.0 Mil.
Net Income was 7.993 + 27.885 + 8.769 + 19.667 = $64.3 Mil.
Non Operating Income was 0.062 + -0.016 + 0.037 + -4.269 = $-4.2 Mil.
Cash Flow from Operations was 35.372 + 23.597 + 28.841 + -12.052 = $75.8 Mil.
|Accounts Receivable was $41.7 Mil.
Revenue was 66.105 + 103.036 + 77.452 + 62.803 = $309.4 Mil.
Gross Profit was 16.578 + 33.938 + 24.966 + 19.251 = $94.7 Mil.
Total Current Assets was $182.2 Mil.
Total Assets was $444.7 Mil.
Property, Plant and Equipment(Net PPE) was $169.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $23.0 Mil.
Selling, General & Admin. Expense(SGA) was $48.1 Mil.
Total Current Liabilities was $91.9 Mil.
Long-Term Debt was $60.0 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)|
|=||(41.475 / 386.033)||/||(41.674 / 309.396)|
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)|
|=||(45.399 / 309.396)||/||(29.079 / 386.033)|
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 - (233.169 + 158.994) / 481.083)||/||(1 - (182.236 + 169.6) / 444.66)|
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))|
|=||(23.023 / (23.023 + 169.6))||/||(23.24 / (23.24 + 158.994))|
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)|
|=||(54.607 / 386.033)||/||(48.097 / 309.396)|
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)|
|=||((60 + 106.168) / 481.083)||/||((60 + 91.87) / 444.66)|
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|
|=||(64.314 - -4.186||-||75.758)||/||481.083|
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.
Cambrex Corp has a M-score of -2.63 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
Cambrex Corp Annual Data
Cambrex Corp Quarterly Data