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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 -3.66. And the median was -2.35.
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 * 0.9653||+||0.528 * 0.9963||+||0.404 * 0.9505||+||0.892 * 1.0338||+||0.115 * 0.8133|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9911||+||4.679 * -0.0706||-||0.327 * 0.9795|
|This Year (Apr15) TTM:||Last Year (Apr14) TTM:|
|Accounts Receivable was $50.6 Mil.|
Revenue was 74.072 + 72.065 + 73.417 + 72.004 = $291.6 Mil.
Gross Profit was 66.477 + 65.525 + 66.651 + 65.594 = $264.2 Mil.
Total Current Assets was $240.7 Mil.
Total Assets was $315.9 Mil.
Property, Plant and Equipment(Net PPE) was $40.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $7.3 Mil.
Selling, General & Admin. Expense(SGA) was $123.6 Mil.
Total Current Liabilities was $31.4 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 10.514 + 16.541 + 17.273 + 13.519 = $57.8 Mil.
Non Operating Income was 0.112 + 0.203 + -0.007 + 0.171 = $0.5 Mil.
Cash Flow from Operations was 16.173 + 20.873 + 24.531 + 18.098 = $79.7 Mil.
|Accounts Receivable was $50.7 Mil.
Revenue was 74.849 + 68.191 + 70.101 + 68.872 = $282.0 Mil.
Gross Profit was 67.425 + 61.731 + 63.175 + 62.328 = $254.7 Mil.
Total Current Assets was $220.4 Mil.
Total Assets was $294.2 Mil.
Property, Plant and Equipment(Net PPE) was $39.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $5.6 Mil.
Selling, General & Admin. Expense(SGA) was $120.6 Mil.
Total Current Liabilities was $29.9 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)|
|=||(50.569 / 291.558)||/||(50.674 / 282.013)|
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)|
|=||(65.525 / 282.013)||/||(66.477 / 291.558)|
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 - (240.721 + 40.287) / 315.944)||/||(1 - (220.431 + 39.535) / 294.191)|
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))|
|=||(5.603 / (5.603 + 39.535))||/||(7.256 / (7.256 + 40.287))|
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)|
|=||(123.62 / 291.558)||/||(120.641 / 282.013)|
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 + 31.449) / 315.944)||/||((0 + 29.898) / 294.191)|
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|
|=||(57.847 - 0.479||-||79.675)||/||315.944|
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 -2.85 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