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Beneish M-Score 2.27 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 -2.40.
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 * 3.847||+||0.528 * 1.3423||+||0.404 * 5.805||+||0.892 * 1.4832||+||0.115 * 1.5119|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0676||+||4.679 * -0.0413||-||0.327 * 1.8451|
|This Year (Mar16) TTM:||Last Year (Apr15) TTM:|
|Accounts Receivable was $288.5 Mil.|
Revenue was 286.969 + 0 + 67.521 + 81.011 = $435.5 Mil.
Gross Profit was 163.402 + 0 + 57.985 + 71.578 = $293.0 Mil.
Total Current Assets was $683.7 Mil.
Total Assets was $2,617.7 Mil.
Property, Plant and Equipment(Net PPE) was $253.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $27.2 Mil.
Selling, General & Admin. Expense(SGA) was $190.5 Mil.
Total Current Liabilities was $381.5 Mil.
Long-Term Debt was $99.2 Mil.
Net Income was -40.378 + 0 + -25.091 + 12.419 = $-53.1 Mil.
Non Operating Income was -1.835 + 0 + -0.109 + -2.068 = $-4.0 Mil.
Cash Flow from Operations was 9.6 + 0 + 30.719 + 18.738 = $59.1 Mil.
|Accounts Receivable was $50.6 Mil.
Revenue was 74.072 + 74.072 + 72.065 + 73.417 = $293.6 Mil.
Gross Profit was 66.477 + 66.477 + 65.525 + 66.651 = $265.1 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 $6.9 Mil.
Selling, General & Admin. Expense(SGA) was $120.3 Mil.
Total Current Liabilities was $31.4 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)|
|=||(288.537 / 435.501)||/||(50.569 / 293.626)|
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)|
|=||(0 / 293.626)||/||(163.402 / 435.501)|
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 - (683.669 + 253.75) / 2617.71)||/||(1 - (240.721 + 40.287) / 315.944)|
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))|
|=||(6.895 / (6.895 + 40.287))||/||(27.152 / (27.152 + 253.75))|
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)|
|=||(190.467 / 435.501)||/||(120.282 / 293.626)|
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)|
|=||((99.222 + 381.548) / 2617.71)||/||((0 + 31.449) / 315.944)|
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|
|=||(-53.05 - -4.012||-||59.057)||/||2617.71|
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 2.27 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