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Beneish M-Score 0.32 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 12.08. The lowest was -6.83. And the median was -3.03.
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 * 2.886||+||0.528 * 1.0676||+||0.404 * 1.5288||+||0.892 * 1.4464||+||0.115 * 2.4277|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.3905||+||4.679 * -0.0022||-||0.327 * 0.5152|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $1,340 Mil.|
Revenue was 6161 + 2530 + 2512 + 2450 = $13,653 Mil.
Gross Profit was 2157 + 1294 + 2496 + 830 = $6,777 Mil.
Total Current Assets was $2,325 Mil.
Total Assets was $149,195 Mil.
Property, Plant and Equipment(Net PPE) was $33,358 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,058 Mil.
Selling, General & Admin. Expense(SGA) was $183 Mil.
Total Current Liabilities was $8,807 Mil.
Long-Term Debt was $60,132 Mil.
Net Income was 3067 + -188 + -122 + 54 = $2,811 Mil.
Non Operating Income was -162 + -8 + 2 + -8 = $-176 Mil.
Cash Flow from Operations was 1590 + 424 + 611 + 689 = $3,314 Mil.
|Accounts Receivable was $321 Mil.
Revenue was 2430 + 2362 + 2360 + 2287 = $9,439 Mil.
Gross Profit was 829 + 1166 + 2238 + 769 = $5,002 Mil.
Total Current Assets was $456 Mil.
Total Assets was $17,319 Mil.
Property, Plant and Equipment(Net PPE) was $8,244 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,111 Mil.
Selling, General & Admin. Expense(SGA) was $324 Mil.
Total Current Liabilities was $1,636 Mil.
Long-Term Debt was $13,896 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)|
|=||(1340 / 13653)||/||(321 / 9439)|
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)|
|=||(5002 / 9439)||/||(6777 / 13653)|
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 - (2325 + 33358) / 149195)||/||(1 - (456 + 8244) / 17319)|
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))|
|=||(2111 / (2111 + 8244))||/||(3058 / (3058 + 33358))|
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)|
|=||(183 / 13653)||/||(324 / 9439)|
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)|
|=||((60132 + 8807) / 149195)||/||((13896 + 1636) / 17319)|
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|
|=||(2811 - -176||-||3314)||/||149195|
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 0.32 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