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Beneish M-Score -0.34 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 -3.02.
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 * 1.9229||+||0.528 * 1.1665||+||0.404 * 0.9949||+||0.892 * 2.212||+||0.115 * 1.5524|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1908||+||4.679 * -0.016||-||0.327 * 0.4838|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $1,242 Mil.|
Revenue was 10037 + 6161 + 2530 + 2512 = $21,240 Mil.
Gross Profit was 5300 + 3225 + 1294 + 1307 = $11,126 Mil.
Total Current Assets was $2,781 Mil.
Total Assets was $148,897 Mil.
Property, Plant and Equipment(Net PPE) was $32,881 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,957 Mil.
Selling, General & Admin. Expense(SGA) was $1,375 Mil.
Total Current Liabilities was $8,647 Mil.
Long-Term Debt was $59,946 Mil.
Net Income was 189 + 3067 + -188 + -122 = $2,946 Mil.
Non Operating Income was 66 + -162 + -8 + 2 = $-102 Mil.
Cash Flow from Operations was 2801 + 1590 + 424 + 611 = $5,426 Mil.
|Accounts Receivable was $292 Mil.
Revenue was 2450 + 2430 + 2362 + 2360 = $9,602 Mil.
Gross Profit was 1237 + 1226 + 1166 + 2238 = $5,867 Mil.
Total Current Assets was $406 Mil.
Total Assets was $36,873 Mil.
Property, Plant and Equipment(Net PPE) was $8,281 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,114 Mil.
Selling, General & Admin. Expense(SGA) was $522 Mil.
Total Current Liabilities was $1,829 Mil.
Long-Term Debt was $33,281 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)|
|=||(1242 / 21240)||/||(292 / 9602)|
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)|
|=||(5867 / 9602)||/||(11126 / 21240)|
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 - (2781 + 32881) / 148897)||/||(1 - (406 + 8281) / 36873)|
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))|
|=||(2114 / (2114 + 8281))||/||(4957 / (4957 + 32881))|
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)|
|=||(1375 / 21240)||/||(522 / 9602)|
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)|
|=||((59946 + 8647) / 148897)||/||((33281 + 1829) / 36873)|
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|
|=||(2946 - -102||-||5426)||/||148897|
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 -0.34 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