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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 5 years, the highest Beneish M-Score of Chesapeake Lodging Trust was -2.23. The lowest was -2.97. And the median was -2.69.
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 * 0.8852||+||0.528 * 1.0047||+||0.404 * 0.8619||+||0.892 * 1.1376||+||0.115 * 0.9594|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.042||+||4.679 * -0.0382||-||0.327 * 0.9465|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $13.1 Mil.|
Revenue was 123.501 + 130.84 + 128.865 + 94.774 = $478.0 Mil.
Gross Profit was 37.785 + 46.12 + 47.178 + 22.015 = $153.1 Mil.
Total Current Assets was $102.5 Mil.
Total Assets was $1,719.9 Mil.
Property, Plant and Equipment(Net PPE) was $1,580.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $51.6 Mil.
Selling, General & Admin. Expense(SGA) was $15.6 Mil.
Total Current Liabilities was $53.4 Mil.
Long-Term Debt was $551.7 Mil.
Net Income was 8.839 + 28.688 + 21.249 + 2.178 = $61.0 Mil.
Non Operating Income was 0 + 7.006 + 0 + 0 = $7.0 Mil.
Cash Flow from Operations was 33.94 + 38.819 + 36.508 + 10.367 = $119.6 Mil.
|Accounts Receivable was $13.0 Mil.
Revenue was 111.563 + 122.443 + 115.57 + 70.601 = $420.2 Mil.
Gross Profit was 34.464 + 42.911 + 42.2 + 15.639 = $135.2 Mil.
Total Current Assets was $92.9 Mil.
Total Assets was $1,554.2 Mil.
Property, Plant and Equipment(Net PPE) was $1,422.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $44.5 Mil.
Selling, General & Admin. Expense(SGA) was $13.1 Mil.
Total Current Liabilities was $46.0 Mil.
Long-Term Debt was $531.8 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)|
|=||(13.102 / 477.98)||/||(13.011 / 420.177)|
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)|
|=||(46.12 / 420.177)||/||(37.785 / 477.98)|
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 - (102.516 + 1580.427) / 1719.935)||/||(1 - (92.938 + 1422.439) / 1554.158)|
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))|
|=||(44.469 / (44.469 + 1422.439))||/||(51.567 / (51.567 + 1580.427))|
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)|
|=||(15.557 / 477.98)||/||(13.125 / 420.177)|
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)|
|=||((551.723 + 53.442) / 1719.935)||/||((531.771 + 45.982) / 1554.158)|
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|
|=||(60.954 - 7.006||-||119.634)||/||1719.935|
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 -2.69 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