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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.
Charter Communications Inc has a M-score of signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of Charter Communications Inc was -2.19. The lowest was -3.54. And the median was -2.90.
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 *||+||0.528 *||+||0.404 *||+||0.892 *||+||0.115 *|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 *||+||4.679 *||-||0.327 *|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $234 Mil.|
Revenue was 2148 + 2118 + 1972 + 1917 = $8,155 Mil.
Gross Profit was 753 + 721 + 677 + 659 = $2,810 Mil.
Total Current Assets was $322 Mil.
Total Assets was $17,295 Mil.
Property, Plant and Equipment(Net PPE) was $7,981 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,854 Mil.
Selling, General & Admin. Expense(SGA) was $11 Mil.
Total Current Liabilities was $1,467 Mil.
Long-Term Debt was $14,181 Mil.
Net Income was 39 + -70 + -96 + -42 = $-169 Mil.
Non Operating Income was 0 + -19 + -63 + -46 = $-128 Mil.
Cash Flow from Operations was 595 + 538 + 484 + 541 = $2,158 Mil.
|Accounts Receivable was $234 Mil.
Revenue was 1913 + 1880 + 1884 + 1827 = $7,504 Mil.
Gross Profit was 685 + 638 + 680 + 641 = $2,644 Mil.
Total Current Assets was $330 Mil.
Total Assets was $15,596 Mil.
Property, Plant and Equipment(Net PPE) was $7,206 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,713 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $1,224 Mil.
Long-Term Debt was $12,808 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)|
|=||(234 / 8155)||/||(234 / 7504)|
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)|
|=||(721 / 7504)||/||(753 / 8155)|
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 - (322 + 7981) / 17295)||/||(1 - (330 + 7206) / 15596)|
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))|
|=||(1713 / (1713 + 7206))||/||(1854 / (1854 + 7981))|
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)|
|=||(11 / 8155)||/||(0 / 7504)|
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)|
|=||((14181 + 1467) / 17295)||/||((12808 + 1224) / 15596)|
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|
|=||(-169 - -128||-||2158)||/||17295|
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 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