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Discovery Communications Inc (NAS:DISCK)
Beneish M-Score
-2.38 (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 -2.38 suggests that the company is not a manipulator.

DISCK' s 10-Year Beneish M-Score Range
Min: -7.17   Max: 4.99
Current: -2.38

-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 * 0.9668+0.528 * 1.045+0.404 * 1.0289+0.892 * 1.1038+0.115 * 1.0141
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9286+4.679 * 0.0012-0.327 * 1.0473
=-2.38

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $1,431 Mil.
Revenue was 1537 + 1676 + 1568 + 1610 = $6,391 Mil.
Gross Profit was 972 + 1078 + 1039 + 1095 = $4,184 Mil.
Total Current Assets was $2,469 Mil.
Total Assets was $15,782 Mil.
Property, Plant and Equipment(Net PPE) was $534 Mil.
Depreciation, Depletion and Amortization(DDA) was $327 Mil.
Selling, General & Admin. Expense(SGA) was $1,683 Mil.
Total Current Liabilities was $1,765 Mil.
Long-Term Debt was $7,036 Mil.
Net Income was 250 + 250 + 280 + 379 = $1,159 Mil.
Non Operating Income was -18 + -31 + 14 + 35 = $0 Mil.
Cash Flow from Operations was 63 + 425 + 420 + 232 = $1,140 Mil.
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 $1,642 Mil.
Total Current Liabilities was $1,253 Mil.
Long-Term Debt was $6,900 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)
=(1431 / 6391) / (1341 / 5790)
=0.22390862 / 0.23160622
=0.9668

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)
=(1078 / 5790) / (972 / 6391)
=0.68411054 / 0.65467063
=1.045

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 - (2469 + 534) / 15782) / (1 - (2740 + 522) / 15311)
=0.80971993 / 0.78695056
=1.0289

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
=6391 / 5790
=1.1038

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))
=(327 / (327 + 522)) / (327 / (327 + 534))
=0.38515901 / 0.37979094
=1.0141

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)
=(1683 / 6391) / (1642 / 5790)
=0.26333907 / 0.2835924
=0.9286

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)
=((7036 + 1765) / 15782) / ((6900 + 1253) / 15311)
=0.55766063 / 0.53249298
=1.0473

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
=(1159 - 0 - 1140) / 15782
=0.0012

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 -2.38 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.80961.10230.61581.72181.03651.01121.05281.00740.98360.9234
GMI 1.11031.05271.61560.29961.00640.96071.01230.98531.04851.0513
AQI 0.96671.01241.04190.91540.94580.99540.94770.99311.06051.0063
SGI 1.10030.99060.110545.30261.00441.07171.12471.07651.23361.1319
DEPI 1.00481.17850.20922.51751.34641.10551.04031.03140.66320.9377
SGAI 1.00931.05071.12521.11871.06080.92210.88691.02411.00340.9354
LVGI 0.79251.34440.984420.52040.92221.02741.04781.14271.091.0405
TATA -0.0234-0.0244-0.0467-0.0196-0.00970.01880.0054-0.0052-0.0185-0.0121
M-score -2.56-2.58-3.6130.98-2.45-2.32-2.30-2.49-2.39-2.47

Discovery Communications Inc Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 1.01611.02881.03511.05270.98360.91960.94540.92430.92340.9668
GMI 0.97920.9921.00681.03151.04851.05641.05161.04451.05131.045
AQI 0.99310.91131.13061.09931.06051.13140.99081.00271.00631.0289
SGI 1.06731.05071.11421.18321.23361.27031.21111.17851.13191.1038
DEPI 1.03141.00610.92730.77570.66320.62290.70550.80210.93771.0141
SGAI 1.02681.04921.04751.02121.00340.96110.95370.95430.93540.9286
LVGI 1.14271.25331.09071.07731.091.02281.02791.03681.04051.0473
TATA -0.0052-0.0013-0.0155-0.0194-0.0185-0.0232-0.0119-0.0079-0.01210.0012
M-score -2.49-2.55-2.41-2.36-2.39-2.38-2.41-2.43-2.47-2.38
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