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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 10.14. The lowest was -3.24. And the median was -2.47.
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 * 0.9516||+||0.528 * 0.8712||+||0.404 * 0.9585||+||0.892 * 0.9937||+||0.115 * 0.9867|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0128||+||4.679 * -0.0555||-||0.327 * 0.9817|
|This Year (Aug15) TTM:||Last Year (Aug14) TTM:|
|Accounts Receivable was $452 Mil.|
Revenue was 4883 + 3590 + 3531 + 3719 = $15,723 Mil.
Gross Profit was 2393 + 1186 + 1196 + 1221 = $5,996 Mil.
Total Current Assets was $1,617 Mil.
Total Assets was $38,797 Mil.
Property, Plant and Equipment(Net PPE) was $32,232 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,614 Mil.
Selling, General & Admin. Expense(SGA) was $2,051 Mil.
Total Current Liabilities was $6,749 Mil.
Long-Term Debt was $6,604 Mil.
Net Income was 1216 + 222 + 49 + -103 = $1,384 Mil.
Non Operating Income was -209 + -8 + -159 + -289 = $-665 Mil.
Cash Flow from Operations was 1281 + 1515 + 771 + 637 = $4,204 Mil.
|Accounts Receivable was $478 Mil.
Revenue was 4947 + 3633 + 3585 + 3658 = $15,823 Mil.
Gross Profit was 2187 + 1061 + 993 + 1016 = $5,257 Mil.
Total Current Assets was $1,602 Mil.
Total Assets was $39,997 Mil.
Property, Plant and Equipment(Net PPE) was $33,073 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,633 Mil.
Selling, General & Admin. Expense(SGA) was $2,038 Mil.
Total Current Liabilities was $7,056 Mil.
Long-Term Debt was $6,967 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)|
|=||(452 / 15723)||/||(478 / 15823)|
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)|
|=||(1186 / 15823)||/||(2393 / 15723)|
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 - (1617 + 32232) / 38797)||/||(1 - (1602 + 33073) / 39997)|
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 + 33073))||/||(1614 / (1614 + 32232))|
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)|
|=||(2051 / 15723)||/||(2038 / 15823)|
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)|
|=||((6604 + 6749) / 38797)||/||((6967 + 7056) / 39997)|
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|
|=||(1384 - -665||-||4204)||/||38797|
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 -2.87 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