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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 * 1.3703||+||0.528 * 0.811||+||0.404 * 1.2644||+||0.892 * 0.6495||+||0.115 * 0.8745|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2018||+||4.679 * -0.054||-||0.327 * 1.1608|
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $1,893 Mil.|
Revenue was 1871 + 1930 + 1807 + 1750 = $7,358 Mil.
Gross Profit was 508 + 509 + 347 + 534 = $1,898 Mil.
Total Current Assets was $3,326 Mil.
Total Assets was $8,819 Mil.
Property, Plant and Equipment(Net PPE) was $984 Mil.
Depreciation, Depletion and Amortization(DDA) was $696 Mil.
Selling, General & Admin. Expense(SGA) was $1,106 Mil.
Total Current Liabilities was $2,701 Mil.
Long-Term Debt was $2,506 Mil.
Net Income was 15 + -21 + -119 + 43 = $-82 Mil.
Non Operating Income was -28 + -59 + -109 + -13 = $-209 Mil.
Cash Flow from Operations was 192 + 50 + 107 + 254 = $603 Mil.
|Accounts Receivable was $2,127 Mil.
Revenue was 2712 + 2761 + 2909 + 2947 = $11,329 Mil.
Gross Profit was 742 + 735 + 476 + 417 = $2,370 Mil.
Total Current Assets was $4,445 Mil.
Total Assets was $10,013 Mil.
Property, Plant and Equipment(Net PPE) was $1,519 Mil.
Depreciation, Depletion and Amortization(DDA) was $863 Mil.
Selling, General & Admin. Expense(SGA) was $1,417 Mil.
Total Current Liabilities was $3,377 Mil.
Long-Term Debt was $1,716 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)|
|=||(1893 / 7358)||/||(2127 / 11329)|
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)|
|=||(2370 / 11329)||/||(1898 / 7358)|
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 - (3326 + 984) / 8819)||/||(1 - (4445 + 1519) / 10013)|
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))|
|=||(863 / (863 + 1519))||/||(696 / (696 + 984))|
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)|
|=||(1106 / 7358)||/||(1417 / 11329)|
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)|
|=||((2506 + 2701) / 8819)||/||((1716 + 3377) / 10013)|
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|
|=||(-82 - -209||-||603)||/||8819|
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 -2.80 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