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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 -1.33. The lowest was -3.03. And the median was -2.35.
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 * 1.0902||+||0.528 * 1.0342||+||0.404 * 0.9041||+||0.892 * 0.9714||+||0.115 * 1.0994|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1009||+||4.679 * -0.0525||-||0.327 * 1.2848|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $132.6 Mil.|
Revenue was 167.798 + 155.402 + 176.561 + 148.564 = $648.3 Mil.
Gross Profit was 41.118 + 42.15 + 53.648 + 44.364 = $181.3 Mil.
Total Current Assets was $337.6 Mil.
Total Assets was $934.2 Mil.
Property, Plant and Equipment(Net PPE) was $568.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $50.9 Mil.
Selling, General & Admin. Expense(SGA) was $73.2 Mil.
Total Current Liabilities was $77.4 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 0.399 + 13.744 + 23.017 + 18.427 = $55.6 Mil.
Non Operating Income was -0.923 + 0.048 + -0.2 + -0.079 = $-1.2 Mil.
Cash Flow from Operations was 8.998 + 39.28 + 13.395 + 44.109 = $105.8 Mil.
|Accounts Receivable was $125.2 Mil.
Revenue was 164.519 + 201.477 + 153.744 + 147.657 = $667.4 Mil.
Gross Profit was 48.518 + 62.759 + 39.333 + 42.384 = $193.0 Mil.
Total Current Assets was $371.4 Mil.
Total Assets was $879.0 Mil.
Property, Plant and Equipment(Net PPE) was $478.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $47.5 Mil.
Selling, General & Admin. Expense(SGA) was $68.4 Mil.
Total Current Liabilities was $56.7 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)|
|=||(132.573 / 648.325)||/||(125.179 / 667.397)|
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)|
|=||(42.15 / 667.397)||/||(41.118 / 648.325)|
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 - (337.611 + 568.716) / 934.226)||/||(1 - (371.382 + 478.535) / 878.951)|
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))|
|=||(47.472 / (47.472 + 478.535))||/||(50.86 / (50.86 + 568.716))|
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)|
|=||(73.154 / 648.325)||/||(68.406 / 667.397)|
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)|
|=||((0 + 77.415) / 934.226)||/||((0 + 56.688) / 878.951)|
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|
|=||(55.587 - -1.154||-||105.782)||/||934.226|
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 -2.79 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