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Discovery Communications Inc (NAS:DISCK)
Beneish M-Score
-2.42 (As of Today)

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.

Discovery Communications Inc has a M-score of -2.42 suggests that the company is not a manipulator.

DISCK' s 10-Year Beneish M-Score Range
Min: -7.96   Max: -0.89
Current: -2.42

-7.96
-0.89

During the past 13 years, the highest Beneish M-Score of Discovery Communications Inc was -0.89. The lowest was -7.96. And the median was -2.42.


Definition

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 Discovery Communications 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 * 0.9243+0.528 * 1.0445+0.404 * 1.0027+0.892 * 1.1785+0.115 * 0.8021
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9414+4.679 * -0.0065-0.327 * 1.0368
=-2.42

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $1,464 Mil.
Revenue was 1568 + 1610 + 1411 + 1537 = $6,126 Mil.
Gross Profit was 1039 + 1095 + 929 + 1062 = $4,125 Mil.
Total Current Assets was $2,584 Mil.
Total Assets was $16,373 Mil.
Property, Plant and Equipment(Net PPE) was $525 Mil.
Depreciation, Depletion and Amortization(DDA) was $329 Mil.
Selling, General & Admin. Expense(SGA) was $1,673 Mil.
Total Current Liabilities was $2,548 Mil.
Long-Term Debt was $6,153 Mil.
Net Income was 280 + 379 + 230 + 290 = $1,179 Mil.
Non Operating Income was 14 + 35 + -4 + -8 = $37 Mil.
Cash Flow from Operations was 420 + 232 + 241 + 355 = $1,248 Mil.
Accounts Receivable was $1,344 Mil.
Revenue was 1375 + 1467 + 1156 + 1200 = $5,198 Mil.
Gross Profit was 940 + 1030 + 814 + 872 = $3,656 Mil.
Total Current Assets was $2,364 Mil.
Total Assets was $14,867 Mil.
Property, Plant and Equipment(Net PPE) was $492 Mil.
Depreciation, Depletion and Amortization(DDA) was $220 Mil.
Selling, General & Admin. Expense(SGA) was $1,508 Mil.
Total Current Liabilities was $1,135 Mil.
Long-Term Debt was $6,485 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(1464 / 6126) / (1344 / 5198)
=0.23898139 / 0.25856098
=0.9243

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(1095 / 5198) / (1039 / 6126)
=0.70334744 / 0.67335945
=1.0445

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (2584 + 525) / 16373) / (1 - (2364 + 492) / 14867)
=0.81011421 / 0.80789668
=1.0027

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=6126 / 5198
=1.1785

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))
=(220 / (220 + 492)) / (329 / (329 + 525))
=0.30898876 / 0.3852459
=0.8021

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)
=(1673 / 6126) / (1508 / 5198)
=0.27309827 / 0.29011158
=0.9414

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)
=((6153 + 2548) / 16373) / ((6485 + 1135) / 14867)
=0.53142369 / 0.51254456
=1.0368

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(1179 - 37 - 1248) / 16373
=-0.0065

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.

Discovery Communications Inc has a M-score of -2.42 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Discovery Communications Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.17760.80961.10550.95251.111.03651.01121.05281.00740.9836
GMI 1.01941.11031.05461.11060.43511.00640.96071.01230.98531.0485
AQI 0.98660.96911.01240.99170.96170.94580.99540.94770.99311.0605
SGI 1.24721.10030.99081.02784.86841.00441.07171.12471.07651.2336
DEPI 0.93171.00481.17870.97060.54241.34641.10551.04031.03140.6632
SGAI 0.94471.00641.05280.82661.51991.06080.92210.88691.02410.989
LVGI 1.73690.79251.34320.986520.49610.92221.02741.04781.14271.09
TATA -0.0184-0.0234-0.0241-0.0203-0.0167-0.00970.01880.0054-0.0052-0.017
M-score -2.42-2.56-2.57-2.51-5.84-2.45-2.32-2.30-2.49-2.38

Discovery Communications Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.12591.01821.01611.02881.03511.05270.98360.91960.94540.9243
GMI 1.01530.99680.97920.9921.00681.03151.04851.05641.05161.0445
AQI 0.93360.94980.99310.91131.13061.09931.06051.13140.99081.0027
SGI 1.12981.08581.06731.05071.11421.18321.23361.27031.21111.1785
DEPI 1.00261.03251.03141.00610.92730.77570.66320.62290.70550.8021
SGAI 0.94031.00651.02681.04921.04751.02120.9890.94760.94050.9414
LVGI 1.13621.13751.14271.25331.09071.07731.091.02281.02791.0368
TATA 0.00870.0034-0.0052-0.0013-0.0155-0.0194-0.0169-0.0216-0.0104-0.0065
M-score -2.26-2.44-2.49-2.55-2.41-2.36-2.38-2.37-2.40-2.42
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