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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 -2.46.
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 * 0.9678||+||0.528 * -0.0009||+||0.404 * 0.4917||+||0.892 * 0.3348||+||0.115 * 0.9657|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 2.235||+||4.679 * -0.149||-||0.327 * 0.9712|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $19.5 Mil.|
Revenue was 20.241 + 20.651 + 33.102 + 56.768 = $130.8 Mil.
Gross Profit was -20.865 + -20.012 + -23.641 + -15.228 = $-79.7 Mil.
Total Current Assets was $235.4 Mil.
Total Assets was $753.0 Mil.
Property, Plant and Equipment(Net PPE) was $505.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $50.1 Mil.
Selling, General & Admin. Expense(SGA) was $48.2 Mil.
Total Current Liabilities was $32.0 Mil.
Long-Term Debt was $70.6 Mil.
Net Income was -19.95 + -20.296 + -24.684 + -50.04 = $-115.0 Mil.
Non Operating Income was 0.05 + 0.008 + 0.076 + -0.082 = $0.1 Mil.
Cash Flow from Operations was -14.719 + 17.729 + -8.295 + 2.448 = $-2.8 Mil.
|Accounts Receivable was $60.1 Mil.
Revenue was 75.807 + 73.252 + 73.747 + 167.798 = $390.6 Mil.
Gross Profit was -4.597 + -10.302 + -25.998 + 41.118 = $0.2 Mil.
Total Current Assets was $309.7 Mil.
Total Assets was $913.3 Mil.
Property, Plant and Equipment(Net PPE) was $573.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $54.7 Mil.
Selling, General & Admin. Expense(SGA) was $64.5 Mil.
Total Current Liabilities was $128.1 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)|
|=||(19.457 / 130.762)||/||(60.053 / 390.604)|
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)|
|=||(0.221 / 390.604)||/||(-79.746 / 130.762)|
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 - (235.388 + 505.456) / 752.974)||/||(1 - (309.664 + 573.761) / 913.348)|
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))|
|=||(54.694 / (54.694 + 573.761))||/||(50.063 / (50.063 + 505.456))|
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)|
|=||(48.243 / 130.762)||/||(64.477 / 390.604)|
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)|
|=||((70.592 + 31.96) / 752.974)||/||((0 + 128.085) / 913.348)|
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|
|=||(-114.97 - 0.052||-||-2.837)||/||752.974|
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 -4.74 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