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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 Cyberonics Inc was 7.02. The lowest was -10000000.00. And the median was -2.46.
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 * 1.0736||+||0.528 * 1.0005||+||0.404 * 0.9835||+||0.892 * 1.0683||+||0.115 * 0.9738|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0068||+||4.679 * -0.0392||-||0.327 * 0.9011|
|This Year (Oct14) TTM:||Last Year (Oct13) TTM:|
|Accounts Receivable was $48.5 Mil.|
Revenue was 73.417 + 72.004 + 74.849 + 68.191 = $288.5 Mil.
Gross Profit was 66.651 + 65.594 + 67.425 + 61.731 = $261.4 Mil.
Total Current Assets was $221.8 Mil.
Total Assets was $296.7 Mil.
Property, Plant and Equipment(Net PPE) was $40.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $5.9 Mil.
Selling, General & Admin. Expense(SGA) was $124.3 Mil.
Total Current Liabilities was $25.2 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 17.273 + 13.519 + 18.428 + 13.9 = $63.1 Mil.
Non Operating Income was -0.007 + 0.171 + -0.089 + -0.035 = $0.0 Mil.
Cash Flow from Operations was 24.531 + 18.098 + 16.448 + 15.631 = $74.7 Mil.
|Accounts Receivable was $42.3 Mil.
Revenue was 70.101 + 68.872 + 68.344 + 62.7 = $270.0 Mil.
Gross Profit was 63.175 + 62.328 + 61.985 + 57.333 = $244.8 Mil.
Total Current Assets was $198.8 Mil.
Total Assets was $265.7 Mil.
Property, Plant and Equipment(Net PPE) was $35.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $5.0 Mil.
Selling, General & Admin. Expense(SGA) was $115.6 Mil.
Total Current Liabilities was $25.1 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)|
|=||(48.458 / 288.461)||/||(42.25 / 270.017)|
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)|
|=||(65.594 / 270.017)||/||(66.651 / 288.461)|
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 - (221.774 + 40.595) / 296.748)||/||(1 - (198.773 + 35.613) / 265.683)|
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))|
|=||(5.027 / (5.027 + 35.613))||/||(5.907 / (5.907 + 40.595))|
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)|
|=||(124.302 / 288.461)||/||(115.563 / 270.017)|
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)|
|=||((0 + 25.249) / 296.748)||/||((0 + 25.087) / 265.683)|
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|
|=||(63.12 - 0.04||-||74.708)||/||296.748|
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 -2.51 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
Cyberonics Inc Annual Data
Cyberonics Inc Quarterly Data