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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 Carnival Corp was 10.13. The lowest was -3.24. And the median was -2.49.
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 Carnival 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 * 1.2853||+||0.528 * 0.8745||+||0.404 * 0.9898||+||0.892 * 1.0003||+||0.115 * 0.9733|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0133||+||4.679 * -0.0539||-||0.327 * 1.0279|
|This Year (Feb16) TTM:||Last Year (Feb15) TTM:|
|Accounts Receivable was $423 Mil.|
Revenue was 3651 + 3711 + 4883 + 3590 = $15,835 Mil.
Gross Profit was 1408 + 1493 + 2393 + 1186 = $6,480 Mil.
Total Current Assets was $1,860 Mil.
Total Assets was $38,446 Mil.
Property, Plant and Equipment(Net PPE) was $31,677 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,648 Mil.
Selling, General & Admin. Expense(SGA) was $2,089 Mil.
Total Current Liabilities was $6,664 Mil.
Long-Term Debt was $7,990 Mil.
Net Income was 142 + 270 + 1216 + 222 = $1,850 Mil.
Non Operating Income was -241 + -191 + -209 + -8 = $-649 Mil.
Cash Flow from Operations was 798 + 978 + 1281 + 1515 = $4,572 Mil.
|Accounts Receivable was $329 Mil.
Revenue was 3531 + 3719 + 4947 + 3633 = $15,830 Mil.
Gross Profit was 1196 + 1221 + 2187 + 1061 = $5,665 Mil.
Total Current Assets was $1,426 Mil.
Total Assets was $38,714 Mil.
Property, Plant and Equipment(Net PPE) was $32,294 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,633 Mil.
Selling, General & Admin. Expense(SGA) was $2,061 Mil.
Total Current Liabilities was $7,412 Mil.
Long-Term Debt was $6,944 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)|
|=||(423 / 15835)||/||(329 / 15830)|
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)|
|=||(5665 / 15830)||/||(6480 / 15835)|
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 - (1860 + 31677) / 38446)||/||(1 - (1426 + 32294) / 38714)|
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))|
|=||(1633 / (1633 + 32294))||/||(1648 / (1648 + 31677))|
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)|
|=||(2089 / 15835)||/||(2061 / 15830)|
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)|
|=||((7990 + 6664) / 38446)||/||((6944 + 7412) / 38714)|
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|
|=||(1850 - -649||-||4572)||/||38446|
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.
Carnival Corp has a M-score of -2.55 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
Carnival Corp Annual Data
Carnival Corp Quarterly Data