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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 13 years, the highest Beneish M-Score of Charter Communications Inc was 13.66. The lowest was -6.77. And the median was -2.96.
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 * 1.1079||+||0.528 * 0.9972||+||0.404 * 0.6863||+||0.892 * 1.0981||+||0.115 * 0.9503|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9855||+||4.679 * -0.1029||-||0.327 * 1.0234|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $264 Mil.|
Revenue was 2362 + 2360 + 2287 + 2259 = $9,268 Mil.
Gross Profit was 1169 + 1201 + 1132 + 1124 = $4,626 Mil.
Total Current Assets was $7,502 Mil.
Total Assets was $24,410 Mil.
Property, Plant and Equipment(Net PPE) was $8,275 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,111 Mil.
Selling, General & Admin. Expense(SGA) was $553 Mil.
Total Current Liabilities was $8,569 Mil.
Long-Term Debt was $13,981 Mil.
Net Income was -81 + -48 + -53 + -45 = $-227 Mil.
Non Operating Income was -6 + -4 + 5 + -20 = $-25 Mil.
Cash Flow from Operations was 528 + 630 + 520 + 632 = $2,310 Mil.
|Accounts Receivable was $217 Mil.
Revenue was 2202 + 2148 + 2118 + 1972 = $8,440 Mil.
Gross Profit was 1089 + 1087 + 1048 + 977 = $4,201 Mil.
Total Current Assets was $304 Mil.
Total Assets was $17,297 Mil.
Property, Plant and Equipment(Net PPE) was $8,079 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,934 Mil.
Selling, General & Admin. Expense(SGA) was $511 Mil.
Total Current Liabilities was $1,523 Mil.
Long-Term Debt was $14,090 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)|
|=||(264 / 9268)||/||(217 / 8440)|
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)|
|=||(1201 / 8440)||/||(1169 / 9268)|
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 - (7502 + 8275) / 24410)||/||(1 - (304 + 8079) / 17297)|
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))|
|=||(1934 / (1934 + 8079))||/||(2111 / (2111 + 8275))|
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)|
|=||(553 / 9268)||/||(511 / 8440)|
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)|
|=||((13981 + 8569) / 24410)||/||((14090 + 1523) / 17297)|
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|
|=||(-227 - -25||-||2310)||/||24410|
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 -2.91 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
Charter Communications Inc Annual Data
Charter Communications Inc Quarterly Data