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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 -2.66 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 * 0.6328||+||0.528 * 0.9816||+||0.404 * 1.1296||+||0.892 * 1.6075||+||0.115 * 0.4045|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0477||+||4.679 * -0.0688||-||0.327 * 1.0945|
|This Year (Dec13) TTM:||Last Year (Sep12) TTM:|
|Accounts Receivable was $117.3 Mil.|
Revenue was 62.177 + 42.851 + 38.111 + 47.132 = $190.3 Mil.
Gross Profit was 20.163 + 15.089 + 9.612 + 13.012 = $57.9 Mil.
Total Current Assets was $351.7 Mil.
Total Assets was $371.2 Mil.
Property, Plant and Equipment(Net PPE) was $7.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $5.0 Mil.
Selling, General & Admin. Expense(SGA) was $59.1 Mil.
Total Current Liabilities was $147.1 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 2.667 + 0.715 + -1.749 + -5.06 = $-3.4 Mil.
Non Operating Income was -0.792 + 0 + 0 + 1.232 = $0.4 Mil.
Cash Flow from Operations was 21.385 + 0 + 0 + 0.293 = $21.7 Mil.
|Accounts Receivable was $115.3 Mil.
Revenue was 48.844 + 35.981 + 33.541 + 0 = $118.4 Mil.
Gross Profit was 14.376 + 11.127 + 9.84 + 0 = $35.3 Mil.
Total Current Assets was $346.3 Mil.
Total Assets was $363.6 Mil.
Property, Plant and Equipment(Net PPE) was $7.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.3 Mil.
Selling, General & Admin. Expense(SGA) was $35.1 Mil.
Total Current Liabilities was $131.6 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)|
|=||(117.307 / 190.271)||/||(115.314 / 118.366)|
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)|
|=||(15.089 / 118.366)||/||(20.163 / 190.271)|
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 - (351.661 + 7.841) / 371.229)||/||(1 - (346.349 + 7.1) / 363.618)|
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 + 7.1))||/||(4.982 / (4.982 + 7.841))|
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)|
|=||(59.083 / 190.271)||/||(35.083 / 118.366)|
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 + 147.062) / 371.229)||/||((0 + 131.615) / 363.618)|
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|
|=||(-3.427 - 0.44||-||21.678)||/||371.229|
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 -2.66 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