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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 -1.88. The lowest was -2.72. And the median was -2.34.
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 * 1.0077||+||0.528 * 0.9943||+||0.404 * 0.8218||+||0.892 * 1.2015||+||0.115 * 1.0385|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9702||+||4.679 * -0.0383||-||0.327 * 1.1086|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $26.5 Mil.|
Revenue was 165.009 + 162.145 + 109.29 + 123.501 = $559.9 Mil.
Gross Profit was 58.242 + 59.576 + 25.386 + 37.785 = $181.0 Mil.
Total Current Assets was $139.9 Mil.
Total Assets was $2,115.7 Mil.
Property, Plant and Equipment(Net PPE) was $1,939.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $65.2 Mil.
Selling, General & Admin. Expense(SGA) was $17.1 Mil.
Total Current Liabilities was $66.6 Mil.
Long-Term Debt was $783.9 Mil.
Net Income was 27.18 + 24.045 + 1.552 + 8.839 = $61.6 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 53.144 + 48.99 + 6.504 + 33.94 = $142.6 Mil.
|Accounts Receivable was $21.9 Mil.
Revenue was 130.84 + 128.865 + 94.774 + 111.563 = $466.0 Mil.
Gross Profit was 46.12 + 47.178 + 22.015 + 34.464 = $149.8 Mil.
Total Current Assets was $301.4 Mil.
Total Assets was $1,766.2 Mil.
Property, Plant and Equipment(Net PPE) was $1,427.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $49.9 Mil.
Selling, General & Admin. Expense(SGA) was $14.7 Mil.
Total Current Liabilities was $51.2 Mil.
Long-Term Debt was $589.3 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)|
|=||(26.514 / 559.945)||/||(21.9 / 466.042)|
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)|
|=||(59.576 / 466.042)||/||(58.242 / 559.945)|
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 - (139.912 + 1939.257) / 2115.727)||/||(1 - (301.374 + 1427.673) / 1766.184)|
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))|
|=||(49.945 / (49.945 + 1427.673))||/||(65.241 / (65.241 + 1939.257))|
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)|
|=||(17.146 / 559.945)||/||(14.709 / 466.042)|
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)|
|=||((783.915 + 66.636) / 2115.727)||/||((589.287 + 51.2) / 1766.184)|
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|
|=||(61.616 - 0||-||142.578)||/||2115.727|
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 -2.57 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