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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 -2.50.
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 * 1.1513||+||0.528 * 0.8678||+||0.404 * 0.9794||+||0.892 * 1.0103||+||0.115 * 1.0017|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0294||+||4.679 * -0.0565||-||0.327 * 1.0833|
|This Year (May16) TTM:||Last Year (May15) TTM:|
|Accounts Receivable was $442 Mil.|
Revenue was 3705 + 3651 + 3711 + 4883 = $15,950 Mil.
Gross Profit was 1447 + 1408 + 1493 + 2393 = $6,741 Mil.
Total Current Assets was $1,600 Mil.
Total Assets was $39,851 Mil.
Property, Plant and Equipment(Net PPE) was $33,244 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,680 Mil.
Selling, General & Admin. Expense(SGA) was $2,130 Mil.
Total Current Liabilities was $7,841 Mil.
Long-Term Debt was $8,183 Mil.
Net Income was 605 + 142 + 270 + 1216 = $2,233 Mil.
Non Operating Income was 184 + -241 + -191 + -209 = $-457 Mil.
Cash Flow from Operations was 1883 + 798 + 978 + 1281 = $4,940 Mil.
|Accounts Receivable was $380 Mil.
Revenue was 3590 + 3531 + 3719 + 4947 = $15,787 Mil.
Gross Profit was 1186 + 1196 + 1221 + 2187 = $5,790 Mil.
Total Current Assets was $1,479 Mil.
Total Assets was $38,611 Mil.
Property, Plant and Equipment(Net PPE) was $32,179 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,629 Mil.
Selling, General & Admin. Expense(SGA) was $2,048 Mil.
Total Current Liabilities was $7,683 Mil.
Long-Term Debt was $6,648 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)|
|=||(442 / 15950)||/||(380 / 15787)|
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)|
|=||(5790 / 15787)||/||(6741 / 15950)|
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 - (1600 + 33244) / 39851)||/||(1 - (1479 + 32179) / 38611)|
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))|
|=||(1629 / (1629 + 32179))||/||(1680 / (1680 + 33244))|
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)|
|=||(2130 / 15950)||/||(2048 / 15787)|
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)|
|=||((8183 + 7841) / 39851)||/||((6648 + 7683) / 38611)|
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|
|=||(2233 - -457||-||4940)||/||39851|
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 -2.71 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