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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 CBS Corp was -1.16. The lowest was -5.04. And the median was -2.54.
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 CBS 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 * 1.0278||+||0.528 * 1.0387||+||0.404 * 0.9997||+||0.892 * 0.9945||+||0.115 * 0.6079|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9812||+||4.679 * 0.0877||-||0.327 * 1.0279|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $3,374 Mil.|
Revenue was 3500 + 3681 + 3367 + 3188 = $13,736 Mil.
Gross Profit was 1358 + 1447 + 1431 + 1390 = $5,626 Mil.
Total Current Assets was $5,220 Mil.
Total Assets was $23,786 Mil.
Property, Plant and Equipment(Net PPE) was $1,394 Mil.
Depreciation, Depletion and Amortization(DDA) was $278 Mil.
Selling, General & Admin. Expense(SGA) was $2,463 Mil.
Total Current Liabilities was $3,092 Mil.
Long-Term Debt was $7,693 Mil.
Net Income was 394 + 413 + 1639 + 439 = $2,885 Mil.
Non Operating Income was -4 + -20 + -373 + 6 = $-391 Mil.
Cash Flow from Operations was 417 + 987 + -336 + 123 = $1,191 Mil.
|Accounts Receivable was $3,301 Mil.
Revenue was 3570 + 3571 + 3302 + 3369 = $13,812 Mil.
Gross Profit was 1449 + 1449 + 1501 + 1477 = $5,876 Mil.
Total Current Assets was $5,077 Mil.
Total Assets was $26,115 Mil.
Property, Plant and Equipment(Net PPE) was $2,179 Mil.
Depreciation, Depletion and Amortization(DDA) was $245 Mil.
Selling, General & Admin. Expense(SGA) was $2,524 Mil.
Total Current Liabilities was $4,072 Mil.
Long-Term Debt was $7,448 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)|
|=||(3374 / 13736)||/||(3301 / 13812)|
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)|
|=||(1447 / 13812)||/||(1358 / 13736)|
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 - (5220 + 1394) / 23786)||/||(1 - (5077 + 2179) / 26115)|
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))|
|=||(245 / (245 + 2179))||/||(278 / (278 + 1394))|
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)|
|=||(2463 / 13736)||/||(2524 / 13812)|
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)|
|=||((7693 + 3092) / 23786)||/||((7448 + 4072) / 26115)|
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|
|=||(2885 - -391||-||1191)||/||23786|
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.
CBS Corp has a M-score of -2.08 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
CBS Corp Annual Data
CBS Corp Quarterly Data