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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 -2.51.
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 * 1.0576||+||0.528 * 0.9972||+||0.404 * 0.9584||+||0.892 * 1.0611||+||0.115 * 0.9654|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.005||+||4.679 * -0.048||-||0.327 * 0.9786|
|This Year (Jan15) TTM:||Last Year (Jan14) TTM:|
|Accounts Receivable was $47.3 Mil.|
Revenue was 72.065 + 73.417 + 72.004 + 74.849 = $292.3 Mil.
Gross Profit was 65.525 + 66.651 + 65.594 + 67.425 = $265.2 Mil.
Total Current Assets was $225.0 Mil.
Total Assets was $301.4 Mil.
Property, Plant and Equipment(Net PPE) was $40.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $5.9 Mil.
Selling, General & Admin. Expense(SGA) was $126.2 Mil.
Total Current Liabilities was $26.3 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 16.541 + 17.273 + 13.519 + 18.428 = $65.8 Mil.
Non Operating Income was 0.203 + -0.007 + 0.171 + -0.089 = $0.3 Mil.
Cash Flow from Operations was 20.873 + 24.531 + 18.098 + 16.448 = $80.0 Mil.
|Accounts Receivable was $42.1 Mil.
Revenue was 68.191 + 70.101 + 68.872 + 68.344 = $275.5 Mil.
Gross Profit was 61.731 + 63.175 + 62.328 + 61.985 = $249.2 Mil.
Total Current Assets was $197.7 Mil.
Total Assets was $269.2 Mil.
Property, Plant and Equipment(Net PPE) was $38.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $5.3 Mil.
Selling, General & Admin. Expense(SGA) was $118.3 Mil.
Total Current Liabilities was $24.0 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)|
|=||(47.26 / 292.335)||/||(42.115 / 275.508)|
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)|
|=||(66.651 / 275.508)||/||(65.525 / 292.335)|
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 - (225.02 + 40.86) / 301.387)||/||(1 - (197.717 + 38.376) / 269.182)|
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))|
|=||(5.347 / (5.347 + 38.376))||/||(5.927 / (5.927 + 40.86))|
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)|
|=||(126.204 / 292.335)||/||(118.343 / 275.508)|
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 + 26.285) / 301.387)||/||((0 + 23.989) / 269.182)|
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|
|=||(65.761 - 0.278||-||79.95)||/||301.387|
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 -2.61 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