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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.
Charm Communications Inc has a M-score of -2.38 suggests that the company is not a manipulator.
During the past 6 years, the highest Beneish M-Score of Charm Communications Inc was 0.00. The lowest was 0.00. And the median was 0.00.
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 Charm Communications Inc 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 * 0.8835||+||0.528 * 1.0576||+||0.404 * 1.3874||+||0.892 * 1.266||+||0.115 * 0.7812|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.5216||+||4.679 * -0.0261||-||0.327 * 0.9314|
|This Year (Jun13) TTM:||Last Year (Jun12) TTM:|
|Accounts Receivable was $117.0 Mil.|
Revenue was 42.851 + 38.111 + 47.132 + 48.844 = $176.9 Mil.
Gross Profit was 15.089 + 9.612 + 13.012 + 14.376 = $52.1 Mil.
Total Current Assets was $299.9 Mil.
Total Assets was $320.3 Mil.
Property, Plant and Equipment(Net PPE) was $8.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.1 Mil.
Selling, General & Admin. Expense(SGA) was $57.0 Mil.
Total Current Liabilities was $103.4 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 0.715 + -1.749 + -5.06 + -0.51 = $-6.6 Mil.
Non Operating Income was 0 + 0 + 1.232 + 0.237 = $1.5 Mil.
Cash Flow from Operations was 0 + 0 + 0.293 + 0 = $0.3 Mil.
|Accounts Receivable was $104.6 Mil.
Revenue was 35.981 + 33.541 + 0 + 70.237 = $139.8 Mil.
Gross Profit was 11.127 + 9.84 + 0 + 22.548 = $43.5 Mil.
Total Current Assets was $337.2 Mil.
Total Assets was $353.9 Mil.
Property, Plant and Equipment(Net PPE) was $6.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.3 Mil.
Selling, General & Admin. Expense(SGA) was $29.6 Mil.
Total Current Liabilities was $122.6 Mil.
Long-Term Debt was $0.0 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)|
|=||(117.026 / 176.938)||/||(104.625 / 139.759)|
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)|
|=||(9.612 / 139.759)||/||(15.089 / 176.938)|
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 - (299.891 + 8.091) / 320.279)||/||(1 - (337.235 + 6.87) / 353.899)|
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))|
|=||(1.324 / (1.324 + 6.87))||/||(2.11 / (2.11 + 8.091))|
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)|
|=||(56.991 / 176.938)||/||(29.585 / 139.759)|
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)|
|=||((0 + 103.374) / 320.279)||/||((0 + 122.644) / 353.899)|
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|
|=||(-6.604 - 1.469||-||0.293)||/||320.279|
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.
Charm Communications Inc has a M-score of -2.38 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
Charm Communications Inc Annual Data
Charm Communications Inc Quarterly Data