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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 CSX Corp was -2.41. The lowest was -3.43. And the median was -2.71.
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 CSX 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 * 1.0192||+||0.528 * 0.965||+||0.404 * 1.0072||+||0.892 * 0.9372||+||0.115 * 0.9601|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0245||+||4.679 * -0.0352||-||0.327 * 1.0232|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $938 Mil.|
Revenue was 3037 + 2710 + 2704 + 2618 = $11,069 Mil.
Gross Profit was 2204 + 1924 + 1908 + 1813 = $7,849 Mil.
Total Current Assets was $2,487 Mil.
Total Assets was $35,414 Mil.
Property, Plant and Equipment(Net PPE) was $31,150 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,301 Mil.
Selling, General & Admin. Expense(SGA) was $3,159 Mil.
Total Current Liabilities was $2,040 Mil.
Long-Term Debt was $10,962 Mil.
Net Income was 458 + 455 + 445 + 356 = $1,714 Mil.
Non Operating Income was -107 + 13 + 8 + 7 = $-79 Mil.
Cash Flow from Operations was 553 + 896 + 838 + 754 = $3,041 Mil.
|Accounts Receivable was $982 Mil.
Revenue was 2781 + 2939 + 3064 + 3027 = $11,811 Mil.
Gross Profit was 1902 + 2022 + 2141 + 2017 = $8,082 Mil.
Total Current Assets was $2,840 Mil.
Total Assets was $34,745 Mil.
Property, Plant and Equipment(Net PPE) was $30,174 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,208 Mil.
Selling, General & Admin. Expense(SGA) was $3,290 Mil.
Total Current Liabilities was $1,952 Mil.
Long-Term Debt was $10,515 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)|
|=||(938 / 11069)||/||(982 / 11811)|
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)|
|=||(8082 / 11811)||/||(7849 / 11069)|
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 - (2487 + 31150) / 35414)||/||(1 - (2840 + 30174) / 34745)|
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))|
|=||(1208 / (1208 + 30174))||/||(1301 / (1301 + 31150))|
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)|
|=||(3159 / 11069)||/||(3290 / 11811)|
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)|
|=||((10962 + 2040) / 35414)||/||((10515 + 1952) / 34745)|
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|
|=||(1714 - -79||-||3041)||/||35414|
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.
CSX Corp has a M-score of -2.72 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
CSX Corp Annual Data
CSX Corp Quarterly Data