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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 -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 * 1.0905||+||0.528 * 0.7451||+||0.404 * 1.2383||+||0.892 * 1.1169||+||0.115 * 0.9394|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9664||+||4.679 * -0.1026||-||0.327 * 1.0201|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $285 Mil.|
Revenue was 2360 + 2287 + 2259 + 2202 = $9,108 Mil.
Gross Profit was 1201 + 1132 + 1124 + 755 = $4,212 Mil.
Total Current Assets was $371 Mil.
Total Assets was $24,550 Mil.
Property, Plant and Equipment(Net PPE) was $8,373 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,102 Mil.
Selling, General & Admin. Expense(SGA) was $408 Mil.
Total Current Liabilities was $1,635 Mil.
Long-Term Debt was $21,023 Mil.
Net Income was -48 + -53 + -45 + -37 = $-183 Mil.
Non Operating Income was -4 + 5 + -20 + -5 = $-24 Mil.
Cash Flow from Operations was 630 + 520 + 632 + 577 = $2,359 Mil.
|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 $378 Mil.
Total Current Liabilities was $1,467 Mil.
Long-Term Debt was $14,181 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)|
|=||(285 / 9108)||/||(234 / 8155)|
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)|
|=||(1132 / 8155)||/||(1201 / 9108)|
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 - (371 + 8373) / 24550)||/||(1 - (322 + 7981) / 17295)|
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))|
|=||(1854 / (1854 + 7981))||/||(2102 / (2102 + 8373))|
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)|
|=||(408 / 9108)||/||(378 / 8155)|
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)|
|=||((21023 + 1635) / 24550)||/||((14181 + 1467) / 17295)|
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|
|=||(-183 - -24||-||2359)||/||24550|
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 -2.82 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