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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 -2.16. The lowest was -4.29. And the median was -2.76.
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 * 0.9356||+||0.528 * 1.0371||+||0.404 * 1.0499||+||0.892 * 0.9516||+||0.115 * 0.9|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2761||+||4.679 * -0.1421||-||0.327 * 1.0148|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $2,435 Mil.|
Revenue was 2947 + 3080 + 3237 + 3329 = $12,593 Mil.
Gross Profit was 417 + 873 + 873 + 918 = $3,081 Mil.
Total Current Assets was $5,186 Mil.
Total Assets was $10,653 Mil.
Property, Plant and Equipment(Net PPE) was $1,692 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,027 Mil.
Selling, General & Admin. Expense(SGA) was $1,564 Mil.
Total Current Liabilities was $3,190 Mil.
Long-Term Debt was $2,170 Mil.
Net Income was -314 + 151 + 146 + 174 = $157 Mil.
Non Operating Income was -13 + -6 + 1 + -2 = $-20 Mil.
Cash Flow from Operations was 653 + 217 + 273 + 548 = $1,691 Mil.
|Accounts Receivable was $2,735 Mil.
Revenue was 3228 + 3187 + 3260 + 3559 = $13,234 Mil.
Gross Profit was 866 + 849 + 794 + 849 = $3,358 Mil.
Total Current Assets was $5,408 Mil.
Total Assets was $11,226 Mil.
Property, Plant and Equipment(Net PPE) was $2,029 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,045 Mil.
Selling, General & Admin. Expense(SGA) was $1,288 Mil.
Total Current Liabilities was $3,382 Mil.
Long-Term Debt was $2,184 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)|
|=||(2435 / 12593)||/||(2735 / 13234)|
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)|
|=||(873 / 13234)||/||(417 / 12593)|
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 - (5186 + 1692) / 10653)||/||(1 - (5408 + 2029) / 11226)|
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))|
|=||(1045 / (1045 + 2029))||/||(1027 / (1027 + 1692))|
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)|
|=||(1564 / 12593)||/||(1288 / 13234)|
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)|
|=||((2170 + 3190) / 10653)||/||((2184 + 3382) / 11226)|
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|
|=||(157 - -20||-||1691)||/||10653|
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 -3.27 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