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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 Copart Inc was -0.22. The lowest was -3.92. And the median was -2.60.
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 Copart 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 * 1.028||+||0.528 * 0.9794||+||0.404 * 0.7393||+||0.892 * 1.1776||+||0.115 * 0.9835|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9628||+||4.679 * -0.0102||-||0.327 * 0.9441|
|This Year (Jan17) TTM:||Last Year (Jan16) TTM:|
|Accounts Receivable was $340 Mil.|
Revenue was 349.532 + 345.991 + 332.659 + 347.246 = $1,375 Mil.
Gross Profit was 146.765 + 145.293 + 141.464 + 157.647 = $591 Mil.
Total Current Assets was $659 Mil.
Total Assets was $1,841 Mil.
Property, Plant and Equipment(Net PPE) was $882 Mil.
Depreciation, Depletion and Amortization(DDA) was $56 Mil.
Selling, General & Admin. Expense(SGA) was $156 Mil.
Total Current Liabilities was $346 Mil.
Long-Term Debt was $566 Mil.
Net Income was 66.066 + 167.28 + 84.968 + 74.016 = $392 Mil.
Non Operating Income was -3.021 + 3.332 + 6.051 + 0.039 = $6 Mil.
Cash Flow from Operations was 81.235 + 74.293 + 125 + 124.177 = $405 Mil.
|Accounts Receivable was $281 Mil.
Revenue was 299.706 + 288.838 + 282.293 + 297.142 = $1,168 Mil.
Gross Profit was 124.614 + 120.861 + 118.784 + 127.417 = $492 Mil.
Total Current Assets was $507 Mil.
Total Assets was $1,604 Mil.
Property, Plant and Equipment(Net PPE) was $744 Mil.
Depreciation, Depletion and Amortization(DDA) was $47 Mil.
Selling, General & Admin. Expense(SGA) was $138 Mil.
Total Current Liabilities was $265 Mil.
Long-Term Debt was $577 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)|
|=||(340.438 / 1375.428)||/||(281.227 / 1167.979)|
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)|
|=||(491.676 / 1167.979)||/||(591.169 / 1375.428)|
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 - (659.252 + 882.256) / 1841.241)||/||(1 - (506.858 + 744.224) / 1604.364)|
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))|
|=||(46.82 / (46.82 + 744.224))||/||(56.495 / (56.495 + 882.256))|
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)|
|=||(155.945 / 1375.428)||/||(137.543 / 1167.979)|
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)|
|=||((565.926 + 345.947) / 1841.241)||/||((576.501 + 265.117) / 1604.364)|
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|
|=||(392.33 - 6.401||-||404.705)||/||1841.241|
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.
Copart Inc has a M-score of -2.44 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
Copart Inc Annual Data
Copart Inc Quarterly Data