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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 1.19. The lowest was -11.33. And the median was -2.69.
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 * 0.9248||+||0.528 * 0.9496||+||0.404 * 0.8938||+||0.892 * 0.8989||+||0.115 * 0.9955|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0365||+||4.679 * -0.0476||-||0.327 * 1.0126|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $917 Mil.|
Revenue was 2618 + 2781 + 2939 + 3064 = $11,402 Mil.
Gross Profit was 1813 + 1902 + 2022 + 2141 = $7,878 Mil.
Total Current Assets was $2,608 Mil.
Total Assets was $34,610 Mil.
Property, Plant and Equipment(Net PPE) was $30,293 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,226 Mil.
Selling, General & Admin. Expense(SGA) was $3,207 Mil.
Total Current Liabilities was $1,692 Mil.
Long-Term Debt was $10,516 Mil.
Net Income was 356 + 466 + 507 + 553 = $1,882 Mil.
Non Operating Income was 7 + 84 + 2 + 4 = $97 Mil.
Cash Flow from Operations was 754 + 858 + 930 + 892 = $3,434 Mil.
|Accounts Receivable was $1,103 Mil.
Revenue was 3027 + 3192 + 3221 + 3244 = $12,684 Mil.
Gross Profit was 2017 + 2100 + 2112 + 2093 = $8,322 Mil.
Total Current Assets was $2,457 Mil.
Total Assets was $33,161 Mil.
Property, Plant and Equipment(Net PPE) was $28,872 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,163 Mil.
Selling, General & Admin. Expense(SGA) was $3,442 Mil.
Total Current Liabilities was $2,038 Mil.
Long-Term Debt was $9,513 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)|
|=||(917 / 11402)||/||(1103 / 12684)|
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)|
|=||(8322 / 12684)||/||(7878 / 11402)|
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 - (2608 + 30293) / 34610)||/||(1 - (2457 + 28872) / 33161)|
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))|
|=||(1163 / (1163 + 28872))||/||(1226 / (1226 + 30293))|
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)|
|=||(3207 / 11402)||/||(3442 / 12684)|
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)|
|=||((10516 + 1692) / 34610)||/||((9513 + 2038) / 33161)|
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|
|=||(1882 - 97||-||3434)||/||34610|
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 -2.94 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