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GuruFocus has detected 6 Warning Signs with Computer Sciences Corp $CSC.
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Computer Sciences Corp (NYSE:CSC)
Beneish M-Score
-2.84 (As of Today)

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.

Computer Sciences Corp has a M-score of -2.84 suggests that the company is not a manipulator.

CSC' s Beneish M-Score Range Over the Past 10 Years
Min: -4.35   Max: -2.07
Current: -2.84

-4.35
-2.07

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.


Definition

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
=-2.84

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

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

Measured as the ratio of days’ sales in receivables in year t to year t-1.

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)
=0.21621262 / 0.16482432
=1.3118

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(2487 / 10132) / (1934 / 7525)
=0.24545993 / 0.25700997
=0.9551

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

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)
=0.52240424 / 0.38803355
=1.3463

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=7525 / 10132
=0.7427

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))
=0.44462453 / 0.41925269
=1.0605

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)
=0.15707641 / 0.11083695
=1.4172

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)
=0.586967 / 0.56264864
=1.0432

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(-94 - -197 - 912) / 8302
=-0.0974

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.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Computer Sciences Corp Annual Data

Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14Mar15Mar16
DSRI 1.09880.95970.83681.05510.97140.88490.5291.9560.47372.5626
GMI 0.96871.00810.97621.00631.0633.20350.28940.79391.21760.8019
AQI 0.97931.18130.92230.9891.06920.91780.87331.08571.11141.1716
SGI 1.01651.11061.01460.96340.99470.98970.94430.86690.93650.5838
DEPI 1.07830.98870.90591.03011.08540.9450.97081.02360.87490.8917
SGAI 1.07050.95841.09420.94990.9791.19471.10911.23361.28421.1591
LVGI 1.13981.07311.00550.90310.8631.31710.96560.95781.05681.1162
TATA -0.0958-0.06-0.0698-0.0639-0.0592-0.4966-0.0171-0.0762-0.1401-0.0547
M-score -2.90-2.64-3.02-2.72-2.67-3.93-3.48-2.17-3.60-1.78

Computer Sciences Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.01060.93560.47390.85640.90730.85242.01661.33261.37031.3118
GMI 0.86711.03711.21561.26321.31070.99670.83020.82230.8110.9551
AQI 1.12321.04991.11141.10741.15431.0951.17161.34831.26441.3463
SGI 0.93380.95160.93610.90110.880.80460.74180.70090.64950.7427
DEPI 0.9270.90.87490.94351.01330.84950.89170.88180.87451.0605
SGAI 1.19851.27611.28281.23061.18230.89240.94551.06151.20181.4172
LVGI 1.00911.01481.05681.05541.02751.11831.11621.15651.16081.0432
TATA -0.0901-0.1421-0.1404-0.1459-0.1321-0.071-0.0509-0.0264-0.054-0.0974
M-score -3.02-3.27-3.60-3.26-3.10-3.12-2.07-2.59-2.80-2.84
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