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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 6.99. The lowest was -3.24. And the median was -2.58.
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 * 0.6017||+||0.528 * 0.9062||+||0.404 * 1.0133||+||0.892 * 1.0277||+||0.115 * 0.9689|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0626||+||4.679 * -0.0487||-||0.327 * 0.9783|
|This Year (Nov14) TTM:||Last Year (Nov13) TTM:|
|Accounts Receivable was $486 Mil.|
Revenue was 3719 + 4947 + 3633 + 3585 = $15,884 Mil.
Gross Profit was 1222 + 2193 + 1068 + 997 = $5,480 Mil.
Total Current Assets was $1,503 Mil.
Total Assets was $39,532 Mil.
Property, Plant and Equipment(Net PPE) was $32,773 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,635 Mil.
Selling, General & Admin. Expense(SGA) was $2,053 Mil.
Total Current Liabilities was $6,921 Mil.
Long-Term Debt was $7,363 Mil.
Net Income was -102 + 1247 + 106 + -15 = $1,236 Mil.
Non Operating Income was -289 + 16 + 22 + -16 = $-267 Mil.
Cash Flow from Operations was 637 + 1120 + 1196 + 477 = $3,430 Mil.
|Accounts Receivable was $786 Mil.
Revenue was 3658 + 4726 + 3479 + 3593 = $15,456 Mil.
Gross Profit was 1037 + 1809 + 992 + 994 = $4,832 Mil.
Total Current Assets was $1,937 Mil.
Total Assets was $40,104 Mil.
Property, Plant and Equipment(Net PPE) was $32,905 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,588 Mil.
Selling, General & Admin. Expense(SGA) was $1,880 Mil.
Total Current Liabilities was $6,720 Mil.
Long-Term Debt was $8,092 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)|
|=||(486 / 15884)||/||(786 / 15456)|
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)|
|=||(2193 / 15456)||/||(1222 / 15884)|
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 - (1503 + 32773) / 39532)||/||(1 - (1937 + 32905) / 40104)|
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))|
|=||(1588 / (1588 + 32905))||/||(1635 / (1635 + 32773))|
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)|
|=||(2053 / 15884)||/||(1880 / 15456)|
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)|
|=||((7363 + 6921) / 39532)||/||((8092 + 6720) / 40104)|
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|
|=||(1236 - -267||-||3430)||/||39532|
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 -3.10 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