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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.
Chesapeake Lodging Trust has a M-score of -2.34 suggests that the company is not a manipulator.
During the past 4 years, the highest Beneish M-Score of Chesapeake Lodging Trust was -1.93. The lowest was -3.87. And the median was -2.46.
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 Chesapeake Lodging Trust 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 * 0.9089||+||0.528 * 1.0048||+||0.404 * 1.0087||+||0.892 * 1.4881||+||0.115 * 0.78|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.7782||+||4.679 * -0.0357||-||0.327 * 1.187|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $18.1 Mil.|
Revenue was 94.774 + 111.563 + 122.443 + 115.57 = $444.4 Mil.
Gross Profit was 22.015 + 34.464 + 42.911 + 42.2 = $141.6 Mil.
Total Current Assets was $100.5 Mil.
Total Assets was $1,576.5 Mil.
Property, Plant and Equipment(Net PPE) was $1,431.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $48.1 Mil.
Selling, General & Admin. Expense(SGA) was $13.7 Mil.
Total Current Liabilities was $48.3 Mil.
Long-Term Debt was $564.2 Mil.
Net Income was 2.178 + 11.528 + 19.243 + 17.057 = $50.0 Mil.
Non Operating Income was 0 + 0 + -0.372 + 0 = $-0.4 Mil.
Cash Flow from Operations was 10.367 + 27.566 + 36.543 + 32.165 = $106.6 Mil.
|Accounts Receivable was $13.4 Mil.
Revenue was 70.601 + 85.1 + 75.86 + 67.046 = $298.6 Mil.
Gross Profit was 15.639 + 26.738 + 27.875 + 25.357 = $95.6 Mil.
Total Current Assets was $160.2 Mil.
Total Assets was $1,404.6 Mil.
Property, Plant and Equipment(Net PPE) was $1,205.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $31.4 Mil.
Selling, General & Admin. Expense(SGA) was $11.8 Mil.
Total Current Liabilities was $38.4 Mil.
Long-Term Debt was $421.4 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)|
|=||(18.061 / 444.35)||/||(13.354 / 298.607)|
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)|
|=||(34.464 / 298.607)||/||(22.015 / 444.35)|
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 - (100.485 + 1431.589) / 1576.487)||/||(1 - (160.204 + 1205.202) / 1404.638)|
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))|
|=||(31.37 / (31.37 + 1205.202))||/||(48.128 / (48.128 + 1431.589))|
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)|
|=||(13.703 / 444.35)||/||(11.833 / 298.607)|
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)|
|=||((564.239 + 48.307) / 1576.487)||/||((421.355 + 38.44) / 1404.638)|
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|
|=||(50.006 - -0.372||-||106.641)||/||1576.487|
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.
Chesapeake Lodging Trust has a M-score of -2.34 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
Chesapeake Lodging Trust Annual Data
Chesapeake Lodging Trust Quarterly Data