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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 6.98. The lowest was -3.24. And the median was -2.60.
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 * 0.9431||+||0.528 * 0.9331||+||0.404 * 0.9773||+||0.892 * 1.0428||+||0.115 * 0.9558|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0188||+||4.679 * -0.0598||-||0.327 * 1.0821|
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
|This Year (Nov16) TTM:||Last Year (Nov15) TTM:|
|Accounts Receivable was $298 Mil.|
Revenue was 3935 + 5097 + 3705 + 3651 = $16,388 Mil.
Gross Profit was 1616 + 2534 + 1447 + 1408 = $7,005 Mil.
Total Current Assets was $1,689 Mil.
Total Assets was $38,936 Mil.
Property, Plant and Equipment(Net PPE) was $32,429 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,738 Mil.
Selling, General & Admin. Expense(SGA) was $2,196 Mil.
Total Current Liabilities was $7,072 Mil.
Long-Term Debt was $8,357 Mil.
Net Income was 608 + 1424 + 605 + 142 = $2,779 Mil.
Non Operating Income was 70 + -38 + 184 + -241 = $-25 Mil.
Cash Flow from Operations was 1024 + 1429 + 1883 + 798 = $5,134 Mil.
|Accounts Receivable was $303 Mil.
Revenue was 3711 + 4883 + 3590 + 3531 = $15,715 Mil.
Gross Profit was 1493 + 2393 + 1186 + 1196 = $6,268 Mil.
Total Current Assets was $2,451 Mil.
Total Assets was $39,237 Mil.
Property, Plant and Equipment(Net PPE) was $31,818 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,626 Mil.
Selling, General & Admin. Expense(SGA) was $2,067 Mil.
Total Current Liabilities was $6,956 Mil.
Long-Term Debt was $7,413 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)|
|=||(298 / 16388)||/||(303 / 15715)|
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)|
|=||(6268 / 15715)||/||(7005 / 16388)|
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 - (1689 + 32429) / 38936)||/||(1 - (2451 + 31818) / 39237)|
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))|
|=||(1626 / (1626 + 31818))||/||(1738 / (1738 + 32429))|
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)|
|=||(2196 / 16388)||/||(2067 / 15715)|
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)|
|=||((8357 + 7072) / 38936)||/||((7413 + 6956) / 39237)|
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|
|=||(2779 - -25||-||5134)||/||38936|
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 -2.85 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