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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 7 years, the highest Beneish M-Score of Cencosud SA was 1.51. The lowest was -2.86. And the median was -2.51.
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 Cencosud SA 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 (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $210 Mil.|
Revenue was 3670.10296721 + 3635.40630854 + 3567.71613617 + 4336.30258 = $15,210 Mil.
Gross Profit was 1043.33516101 + 1064.61594026 + 1033.99088624 + 1280.84904992 = $4,423 Mil.
Total Current Assets was $3,569 Mil.
Total Assets was $14,701 Mil.
Property, Plant and Equipment(Net PPE) was $3,838 Mil.
Depreciation, Depletion and Amortization(DDA) was $0 Mil.
Selling, General & Admin. Expense(SGA) was $3,404 Mil.
Total Current Liabilities was $3,614 Mil.
Long-Term Debt was $3,957 Mil.
Net Income was 51.4014527275 + 123.24922865 + 156.605626257 + 268.355720381 = $600 Mil.
Non Operating Income was -284.45573298 + 99.6774597651 + -38.944556162 + -121.790777983 = $-346 Mil.
Cash Flow from Operations was 125.734037642 + -97.366876903 + -77.4423901178 + 589.496292135 = $540 Mil.
|Accounts Receivable was $1,286 Mil.
Revenue was 3862.32369942 + 4196.7751764 + 4302.05499027 + 4963.66803319 = $17,325 Mil.
Gross Profit was 1115.77023121 + 1226.56670943 + 1201.01714888 + 1349.99212355 = $4,893 Mil.
Total Current Assets was $3,546 Mil.
Total Assets was $14,819 Mil.
Property, Plant and Equipment(Net PPE) was $4,120 Mil.
Depreciation, Depletion and Amortization(DDA) was $0 Mil.
Selling, General & Admin. Expense(SGA) was $4,052 Mil.
Total Current Liabilities was $3,492 Mil.
Long-Term Debt was $4,216 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)|
|=||(210.448173798 / 15209.5279919)||/||(1285.75578035 / 17324.8218993)|
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)|
|=||(4893.34621307 / 17324.8218993)||/||(4422.79103743 / 15209.5279919)|
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 - (3568.65227761 + 3838.27877077) / 14700.9674783)||/||(1 - (3545.60549133 + 4120.17919075) / 14819.4205202)|
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))|
|=||(0 / (0 + 4120.17919075))||/||(0 / (0 + 3838.27877077))|
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)|
|=||(3403.9938043 / 15209.5279919)||/||(4051.682562 / 17324.8218993)|
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)|
|=||((3956.9008587 + 3614.42588149) / 14700.9674783)||/||((4215.76445087 + 3492.02890173) / 14819.4205202)|
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|
|=||(599.612028016 - -345.513607361||-||540.421062756)||/||14700.9674783|
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.
Cencosud SA 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
Cencosud SA Annual Data
Cencosud SA Quarterly Data