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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 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 * 0.8952||+||0.528 * 0.9695||+||0.404 * 2.1363||+||0.892 * 1.0706||+||0.115 * 0.9873|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0193||+||4.679 * -0.0615||-||0.327 * 1.0431|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $253 Mil.|
Revenue was 2530 + 2512 + 2450 + 2430 = $9,922 Mil.
Gross Profit was 1294 + 2496 + 830 + 1229 = $5,849 Mil.
Total Current Assets was $1,612 Mil.
Total Assets was $40,524 Mil.
Property, Plant and Equipment(Net PPE) was $8,294 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,150 Mil.
Selling, General & Admin. Expense(SGA) was $335 Mil.
Total Current Liabilities was $1,925 Mil.
Long-Term Debt was $37,124 Mil.
Net Income was -188 + -122 + 54 + -122 = $-378 Mil.
Non Operating Income was -8 + 2 + -8 + -127 = $-141 Mil.
Cash Flow from Operations was 424 + 611 + 689 + 531 = $2,255 Mil.
|Accounts Receivable was $264 Mil.
Revenue was 2362 + 2360 + 2287 + 2259 = $9,268 Mil.
Gross Profit was 1166 + 2238 + 769 + 1124 = $5,297 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 $307 Mil.
Total Current Liabilities was $8,569 Mil.
Long-Term Debt was $13,981 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)|
|=||(253 / 9922)||/||(264 / 9268)|
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)|
|=||(5297 / 9268)||/||(5849 / 9922)|
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 - (1612 + 8294) / 40524)||/||(1 - (7502 + 8275) / 24410)|
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 + 8275))||/||(2150 / (2150 + 8294))|
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)|
|=||(335 / 9922)||/||(307 / 9268)|
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)|
|=||((37124 + 1925) / 40524)||/||((13981 + 8569) / 24410)|
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|
|=||(-378 - -141||-||2255)||/||40524|
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 -2.38 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