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GuruFocus has detected 8 Warning Signs with Charter Communications Inc $CHTR.
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Charter Communications Inc (NAS:CHTR)
Beneish M-Score
-0.03 (As of Today)

Warning Sign:

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.

Charter Communications Inc has a M-score of -0.03 signals that the company is a manipulator.

CHTR' s Beneish M-Score Range Over the Past 10 Years
Min: -3.88   Max: -0.03
Current: -0.03

-3.88
-0.03

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.


Definition

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
=-0.03

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

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

Measured as the ratio of days’ sales in receivables in year t to year t-1.

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)
=0.0493742 / 0.02860365
=1.7262

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(3328 / 9754) / (10352 / 29003)
=0.34119336 / 0.35692859
=0.9559

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

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)
=0.75673355 / 0.77897039
=0.9715

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=29003 / 9754
=2.9734

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))
=0.20296084 / 0.17323802
=1.1716

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)
=0.06623453 / 0.07063769
=0.9377

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)
=0.46483125 / 0.95876997
=0.4848

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(3522 - -36 - 8041) / 149067
=-0.0301

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.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Charter Communications Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.05810.9141.02121.06320.83820.92021.09050.91411.7262
GMI 0.98860.99021.11121.39740.7311.01321.43751.00880.9563
AQI 0.99540.8790.98570.98150.96591.0061.23581.21240.9715
SGI 1.09051.07951.08951.02051.04161.08681.11691.07092.9734
DEPI 1.00250.99261.13890.9740.97641.01880.93940.98871.1716
SGAI 1.01461.00690.25943.52850.29021.18920.85041.21970
LVGI 1.07441.14310.51211.05641.00171.00561.02071.03820.4848
TATA -0.1266-0.2031-0.1322-0.1255-0.1363-0.1281-0.1039-0.0634-0.0301
M-score -2.97-3.54-2.64-3.24-3.27-3.10-2.44-2.750.13

Charter Communications Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.02291.09051.10791.17771.0020.91410.89522.8861.92291.7262
GMI 1.24291.10051.18191.17420.98131.2271.2051.05851.03650.9559
AQI 1.11621.23580.68630.97841.30461.21242.13631.52880.99490.9715
SGI 1.12321.11691.09811.08161.07941.07091.07061.44642.2122.9734
DEPI 0.94520.93940.95030.97210.98030.98870.98732.42771.55241.1716
SGAI 1.66620.53680.4820.53741.03782.40062.12981.84691.19080.9377
LVGI 1.00671.02071.02340.99691.041.03821.04310.51520.48380.4848
TATA -0.1155-0.1039-0.1035-0.1375-0.0659-0.0634-0.0615-0.0022-0.016-0.0301
M-score -2.84-2.56-2.73-2.73-2.62-2.84-2.440.06-0.41-0.03
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