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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 Computer Sciences Corp was -2.07. The lowest was -4.35. And the median was -2.80.
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 Computer Sciences Corp 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 * 1.3118||+||0.528 * 0.9551||+||0.404 * 1.3463||+||0.892 * 0.7427||+||0.115 * 1.0605|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.4172||+||4.679 * -0.0974||-||0.327 * 1.0432|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $1,627 Mil.|
Revenue was 1917 + 1871 + 1930 + 1807 = $7,525 Mil.
Gross Profit was 570 + 508 + 509 + 347 = $1,934 Mil.
Total Current Assets was $3,048 Mil.
Total Assets was $8,302 Mil.
Property, Plant and Equipment(Net PPE) was $917 Mil.
Depreciation, Depletion and Amortization(DDA) was $662 Mil.
Selling, General & Admin. Expense(SGA) was $1,182 Mil.
Total Current Liabilities was $2,656 Mil.
Long-Term Debt was $2,217 Mil.
Net Income was 31 + 15 + -21 + -119 = $-94 Mil.
Non Operating Income was -1 + -28 + -59 + -109 = $-197 Mil.
Cash Flow from Operations was 563 + 192 + 50 + 107 = $912 Mil.
|Accounts Receivable was $1,670 Mil.
Revenue was 1750 + 2712 + 2761 + 2909 = $10,132 Mil.
Gross Profit was 534 + 742 + 735 + 476 = $2,487 Mil.
Total Current Assets was $3,861 Mil.
Total Assets was $7,989 Mil.
Property, Plant and Equipment(Net PPE) was $1,028 Mil.
Depreciation, Depletion and Amortization(DDA) was $823 Mil.
Selling, General & Admin. Expense(SGA) was $1,123 Mil.
Total Current Liabilities was $2,586 Mil.
Long-Term Debt was $1,909 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)|
|=||(1627 / 7525)||/||(1670 / 10132)|
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)|
|=||(2487 / 10132)||/||(1934 / 7525)|
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 - (3048 + 917) / 8302)||/||(1 - (3861 + 1028) / 7989)|
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))|
|=||(823 / (823 + 1028))||/||(662 / (662 + 917))|
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)|
|=||(1182 / 7525)||/||(1123 / 10132)|
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)|
|=||((2217 + 2656) / 8302)||/||((1909 + 2586) / 7989)|
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|
|=||(-94 - -197||-||912)||/||8302|
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.
Computer Sciences Corp has a M-score of -2.84 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
Computer Sciences Corp Annual Data
Computer Sciences Corp Quarterly Data