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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 6 years, the highest Beneish M-Score of Chesapeake Lodging Trust was -1.88. The lowest was -2.77. And the median was -2.43.
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 * 0.7586||+||0.528 * 0.9541||+||0.404 * 1.0083||+||0.892 * 1.1816||+||0.115 * 0.7851|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9545||+||4.679 * -0.0425||-||0.327 * 0.9816|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $25.3 Mil.|
Revenue was 169.431 + 140.611 + 146.18 + 165.009 = $621.2 Mil.
Gross Profit was 62.752 + 40.206 + 47.918 + 58.242 = $209.1 Mil.
Total Current Assets was $146.1 Mil.
Total Assets was $2,079.8 Mil.
Property, Plant and Equipment(Net PPE) was $1,897.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $74.5 Mil.
Selling, General & Admin. Expense(SGA) was $19.0 Mil.
Total Current Liabilities was $67.9 Mil.
Long-Term Debt was $766.7 Mil.
Net Income was 28.542 + 10.07 + 14.731 + 27.18 = $80.5 Mil.
Non Operating Income was 0.598 + 0 + 0 + 0 = $0.6 Mil.
Cash Flow from Operations was 47.112 + 25.069 + 43.075 + 53.144 = $168.4 Mil.
|Accounts Receivable was $28.2 Mil.
Revenue was 162.145 + 109.29 + 123.501 + 130.84 = $525.8 Mil.
Gross Profit was 59.576 + 25.386 + 37.785 + 46.12 = $168.9 Mil.
Total Current Assets was $142.0 Mil.
Total Assets was $2,130.6 Mil.
Property, Plant and Equipment(Net PPE) was $1,951.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $59.7 Mil.
Selling, General & Admin. Expense(SGA) was $16.8 Mil.
Total Current Liabilities was $64.4 Mil.
Long-Term Debt was $806.5 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)|
|=||(25.307 / 621.231)||/||(28.233 / 525.776)|
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)|
|=||(168.867 / 525.776)||/||(209.118 / 621.231)|
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 - (146.074 + 1897.638) / 2079.836)||/||(1 - (142.033 + 1951.88) / 2130.616)|
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))|
|=||(59.661 / (59.661 + 1951.88))||/||(74.501 / (74.501 + 1897.638))|
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)|
|=||(18.971 / 621.231)||/||(16.821 / 525.776)|
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)|
|=||((766.667 + 67.896) / 2079.836)||/||((806.514 + 64.44) / 2130.616)|
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|
|=||(80.523 - 0.598||-||168.4)||/||2079.836|
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 -2.77 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