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Beneish M-Score -0.03 higher than -2.22, which implies that it might have manipulated its financial results.
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 13 years, the highest Beneish M-Score of Charter Communications Inc was -0.03. The lowest was -3.88. And the median was -3.00.
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 Charter 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 * 1.7262||+||0.528 * 0.9559||+||0.404 * 0.9715||+||0.892 * 2.9734||+||0.115 * 1.1716|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9377||+||4.679 * -0.0301||-||0.327 * 0.4848|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $1,432 Mil.|
Revenue was 10275 + 10037 + 6161 + 2530 = $29,003 Mil.
Gross Profit was 533 + 5300 + 3225 + 1294 = $10,352 Mil.
Total Current Assets was $3,300 Mil.
Total Assets was $149,067 Mil.
Property, Plant and Equipment(Net PPE) was $32,963 Mil.
Depreciation, Depletion and Amortization(DDA) was $6,907 Mil.
Selling, General & Admin. Expense(SGA) was $1,921 Mil.
Total Current Liabilities was $9,572 Mil.
Long-Term Debt was $59,719 Mil.
Net Income was 454 + 189 + 3067 + -188 = $3,522 Mil.
Non Operating Income was 68 + 66 + -162 + -8 = $-36 Mil.
Cash Flow from Operations was 3226 + 2801 + 1590 + 424 = $8,041 Mil.
|Accounts Receivable was $279 Mil.
Revenue was 2512 + 2450 + 2430 + 2362 = $9,754 Mil.
Gross Profit was -301 + 1237 + 1226 + 1166 = $3,328 Mil.
Total Current Assets was $345 Mil.
Total Assets was $39,316 Mil.
Property, Plant and Equipment(Net PPE) was $8,345 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,125 Mil.
Selling, General & Admin. Expense(SGA) was $689 Mil.
Total Current Liabilities was $1,972 Mil.
Long-Term Debt was $35,723 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)|
|=||(1432 / 29003)||/||(279 / 9754)|
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)|
|=||(3328 / 9754)||/||(10352 / 29003)|
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 - (3300 + 32963) / 149067)||/||(1 - (345 + 8345) / 39316)|
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))|
|=||(2125 / (2125 + 8345))||/||(6907 / (6907 + 32963))|
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)|
|=||(1921 / 29003)||/||(689 / 9754)|
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)|
|=||((59719 + 9572) / 149067)||/||((35723 + 1972) / 39316)|
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|
|=||(3522 - -36||-||8041)||/||149067|
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.
Charter Communications Inc has a M-score of -0.03 signals that the company is likely to 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
Charter Communications Inc Annual Data
Charter Communications Inc Quarterly Data