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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 Carbo Ceramics Inc was 268.41. The lowest was -10000000.00. And the median was -2.44.
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 Carbo Ceramics 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 * 2.187||+||0.528 * -0.8594||+||0.404 * 0.5035||+||0.892 * 0.4166||+||0.115 * 0.8986|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.9069||+||4.679 * -0.1507||-||0.327 * 1.0233|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $62.6 Mil.|
Revenue was 33.102 + 56.768 + 75.807 + 73.252 = $238.9 Mil.
Gross Profit was -23.641 + -15.228 + -4.597 + -10.302 = $-53.8 Mil.
Total Current Assets was $216.1 Mil.
Total Assets was $759.5 Mil.
Property, Plant and Equipment(Net PPE) was $528.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $53.8 Mil.
Selling, General & Admin. Expense(SGA) was $57.8 Mil.
Total Current Liabilities was $42.4 Mil.
Long-Term Debt was $52.7 Mil.
Net Income was -24.684 + -50.04 + -13.898 + -17.004 = $-105.6 Mil.
Non Operating Income was 0.076 + -0.318 + -0.064 + -0.004 = $-0.3 Mil.
Cash Flow from Operations was -8.295 + 2.448 + 8.679 + 6.335 = $9.2 Mil.
|Accounts Receivable was $68.7 Mil.
Revenue was 73.747 + 167.798 + 155.402 + 176.561 = $573.5 Mil.
Gross Profit was -25.998 + 41.118 + 42.15 + 53.648 = $110.9 Mil.
Total Current Assets was $327.6 Mil.
Total Assets was $939.5 Mil.
Property, Plant and Equipment(Net PPE) was $575.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $52.1 Mil.
Selling, General & Admin. Expense(SGA) was $72.7 Mil.
Total Current Liabilities was $115.0 Mil.
Long-Term Debt was $0.0 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)|
|=||(62.607 / 238.929)||/||(68.713 / 573.508)|
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)|
|=||(-15.228 / 573.508)||/||(-23.641 / 238.929)|
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 - (216.07 + 528.616) / 759.523)||/||(1 - (327.585 + 575.478) / 939.513)|
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))|
|=||(52.051 / (52.051 + 575.478))||/||(53.754 / (53.754 + 528.616))|
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)|
|=||(57.793 / 238.929)||/||(72.748 / 573.508)|
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)|
|=||((52.651 + 42.448) / 759.523)||/||((0 + 114.958) / 939.513)|
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|
|=||(-105.626 - -0.31||-||9.167)||/||759.523|
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.
Carbo Ceramics Inc has a M-score of -3.97 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
Carbo Ceramics Inc Annual Data
Carbo Ceramics Inc Quarterly Data