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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 17.29. The lowest was -12.93. And the median was -2.62.
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 * 0.9446||+||0.528 * 0.9414||+||0.404 * 0.917||+||0.892 * 1.0188||+||0.115 * 1.0137|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0531||+||4.679 * -0.0434||-||0.327 * 1.0039|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $1,022 Mil.|
Revenue was 3064 + 3027 + 3192 + 3221 = $12,504 Mil.
Gross Profit was 2141 + 2017 + 2100 + 2112 = $8,370 Mil.
Total Current Assets was $2,669 Mil.
Total Assets was $33,777 Mil.
Property, Plant and Equipment(Net PPE) was $29,250 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,175 Mil.
Selling, General & Admin. Expense(SGA) was $3,885 Mil.
Total Current Liabilities was $1,778 Mil.
Long-Term Debt was $10,107 Mil.
Net Income was 553 + 442 + 491 + 509 = $1,995 Mil.
Non Operating Income was 4 + 2 + 2 + -26 = $-18 Mil.
Cash Flow from Operations was 892 + 690 + 1041 + 857 = $3,480 Mil.
|Accounts Receivable was $1,062 Mil.
Revenue was 3244 + 3012 + 3032 + 2985 = $12,273 Mil.
Gross Profit was 2093 + 1836 + 1897 + 1908 = $7,734 Mil.
Total Current Assets was $2,372 Mil.
Total Assets was $31,975 Mil.
Property, Plant and Equipment(Net PPE) was $27,685 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,128 Mil.
Selling, General & Admin. Expense(SGA) was $3,621 Mil.
Total Current Liabilities was $2,797 Mil.
Long-Term Debt was $8,410 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)|
|=||(1022 / 12504)||/||(1062 / 12273)|
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)|
|=||(2017 / 12273)||/||(2141 / 12504)|
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 - (2669 + 29250) / 33777)||/||(1 - (2372 + 27685) / 31975)|
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))|
|=||(1128 / (1128 + 27685))||/||(1175 / (1175 + 29250))|
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)|
|=||(3885 / 12504)||/||(3621 / 12273)|
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)|
|=||((10107 + 1778) / 33777)||/||((8410 + 2797) / 31975)|
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|
|=||(1995 - -18||-||3480)||/||33777|
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 -2.79 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