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Discovery Communications Inc (NAS:DISCK)
Beneish M-Score
-2.37 (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 -2.37 suggests that the company is not a manipulator.

DISCK' s 10-Year Beneish M-Score Range
Min: -7.17   Max: 4.99
Current: -2.37

-7.17
4.99

During the past 13 years, the highest Beneish M-Score of Discovery Communications Inc was 4.99. The lowest was -7.17. 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 * 0.9196+0.528 * 1.0564+0.404 * 1.1314+0.892 * 1.2703+0.115 * 0.6229
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9464+4.679 * -0.0216-0.327 * 1.0228
=-2.37

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $1,341 Mil.
Revenue was 1411 + 1537 + 1375 + 1467 = $5,790 Mil.
Gross Profit was 929 + 1062 + 940 + 1030 = $3,961 Mil.
Total Current Assets was $2,740 Mil.
Total Assets was $15,311 Mil.
Property, Plant and Equipment(Net PPE) was $522 Mil.
Depreciation, Depletion and Amortization(DDA) was $327 Mil.
Selling, General & Admin. Expense(SGA) was $1,617 Mil.
Total Current Liabilities was $1,253 Mil.
Long-Term Debt was $6,900 Mil.
Net Income was 230 + 289 + 255 + 300 = $1,074 Mil.
Non Operating Income was -4 + 16 + 0 + -3 = $9 Mil.
Cash Flow from Operations was 241 + 355 + 460 + 339 = $1,395 Mil.
Accounts Receivable was $1,148 Mil.
Revenue was 1156 + 1200 + 1076 + 1126 = $4,558 Mil.
Gross Profit was 814 + 872 + 780 + 828 = $3,294 Mil.
Total Current Assets was $4,013 Mil.
Total Assets was $14,421 Mil.
Property, Plant and Equipment(Net PPE) was $377 Mil.
Depreciation, Depletion and Amortization(DDA) was $119 Mil.
Selling, General & Admin. Expense(SGA) was $1,345 Mil.
Total Current Liabilities was $1,101 Mil.
Long-Term Debt was $6,407 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)
=(1341 / 5790) / (1148 / 4558)
=0.23160622 / 0.25186485
=0.9196

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)
=(1062 / 4558) / (929 / 5790)
=0.72268539 / 0.68411054
=1.0564

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 - (2740 + 522) / 15311) / (1 - (4013 + 377) / 14421)
=0.78695056 / 0.69558283
=1.1314

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
=5790 / 4558
=1.2703

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))
=(119 / (119 + 377)) / (327 / (327 + 522))
=0.23991935 / 0.38515901
=0.6229

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)
=(1617 / 5790) / (1345 / 4558)
=0.27927461 / 0.29508556
=0.9464

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)
=((6900 + 1253) / 15311) / ((6407 + 1101) / 14421)
=0.53249298 / 0.52062964
=1.0228

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
=(1074 - 9 - 1395) / 15311
=-0.0216

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 -2.37 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 1.17760.80961.10230.61581.72181.03651.01121.05281.00740.9836
GMI 1.01941.11031.05271.61560.29961.00640.96071.01230.98531.0485
AQI 0.9890.96671.01241.04190.91540.94580.99540.94770.99311.0605
SGI 1.24721.10030.99060.110545.30261.00441.07171.12471.07651.2336
DEPI 0.93171.00481.17850.20922.51751.34641.10551.04031.03140.6632
SGAI 0.9421.00931.05071.12521.11871.06080.92210.88691.02410.989
LVGI 1.73690.79251.34440.984420.52040.92221.02741.04781.14271.09
TATA -0.0184-0.0234-0.0244-0.0467-0.0196-0.00970.01880.0054-0.0052-0.017
M-score -2.42-2.56-2.58-3.6130.98-2.45-2.32-2.30-2.49-2.38

Discovery Communications Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 1.04381.07081.12591.01821.01611.02881.03511.05270.98360.9196
GMI 1.01861.01961.01530.99680.97920.9921.00681.03151.04851.0564
AQI 0.94770.93280.93360.94980.99310.91131.13061.09931.06051.1314
SGI 1.13441.14521.12981.08581.06731.05071.11421.18321.23361.2703
DEPI 1.04031.02571.00261.03251.03141.00610.92730.77570.66320.6229
SGAI 0.88450.91920.94031.00651.02681.04921.03651.00360.98770.9464
LVGI 1.04781.0871.13621.13751.14271.25331.09071.07731.091.0228
TATA 0.0054-0.00070.00870.0034-0.0052-0.0013-0.0145-0.0176-0.0168-0.0216
M-score -2.30-2.32-2.26-2.44-2.49-2.55-2.40-2.35-2.38-2.37
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