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Beneish M-Score 3.24 higher than -2.22, which implies that it might have manipulated its financial results.
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 Cyberonics Inc was 7.02. The lowest was -10000000.00. And the median was -2.37.
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 Cyberonics Inc 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 * 1.571||+||0.528 * 1.5289||+||0.404 * 6.6293||+||0.892 * 3.9721||+||0.115 * 0.5948|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8178||+||4.679 * -0.0121||-||0.327 * 0.8226|
|This Year (Sep16) TTM:||Last Year (Oct15) TTM:|
|Accounts Receivable was $284.3 Mil.|
Revenue was 295.268 + 321.047 + 286.969 + 267.175 = $1,170.5 Mil.
Gross Profit was 188.814 + 190.393 + 163.402 + 136.964 = $679.6 Mil.
Total Current Assets was $647.3 Mil.
Total Assets was $2,497.0 Mil.
Property, Plant and Equipment(Net PPE) was $245.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $81.1 Mil.
Selling, General & Admin. Expense(SGA) was $441.5 Mil.
Total Current Liabilities was $316.9 Mil.
Long-Term Debt was $90.9 Mil.
Net Income was -1.569 + 8.957 + -40.378 + -16.941 = $-49.9 Mil.
Non Operating Income was 1.216 + 0.617 + -1.835 + -10.406 = $-10.4 Mil.
Cash Flow from Operations was 36.764 + 2.984 + 9.6 + -58.745 = $-9.4 Mil.
|Accounts Receivable was $45.6 Mil.
Revenue was 67.521 + 81.011 + 74.072 + 72.065 = $294.7 Mil.
Gross Profit was 57.985 + 71.578 + 66.477 + 65.525 = $261.6 Mil.
Total Current Assets was $282.4 Mil.
Total Assets was $357.6 Mil.
Property, Plant and Equipment(Net PPE) was $40.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $7.0 Mil.
Selling, General & Admin. Expense(SGA) was $135.9 Mil.
Total Current Liabilities was $71.0 Mil.
Long-Term Debt was $0.0 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)|
|=||(284.345 / 1170.459)||/||(45.567 / 294.669)|
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)|
|=||(261.565 / 294.669)||/||(679.573 / 1170.459)|
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 - (647.33 + 245.12) / 2496.96)||/||(1 - (282.406 + 40.574) / 357.647)|
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))|
|=||(7.038 / (7.038 + 40.574))||/||(81.068 / (81.068 + 245.12))|
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)|
|=||(441.483 / 1170.459)||/||(135.911 / 294.669)|
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)|
|=||((90.938 + 316.895) / 2496.96)||/||((0 + 71.013) / 357.647)|
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|
|=||(-49.931 - -10.408||-||-9.397)||/||2496.96|
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.
Cyberonics Inc has a M-score of 3.24 signals that the company is likely to 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
Cyberonics Inc Annual Data
Cyberonics Inc Quarterly Data