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Discovery Communications Inc (NAS:DISCK)
Beneish M-Score
-2.47 (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 -2.47 suggests that the company is not a manipulator.

DISCK' s 10-Year Beneish M-Score Range
Min: -3.86   Max: 4.99
Current: -2.47

-3.86
4.99

During the past 13 years, the highest Beneish M-Score of Discovery Communications Inc was 4.99. The lowest was -3.86. And the median was -2.39.


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 * 0.9234+0.528 * 1.0513+0.404 * 1.0063+0.892 * 1.1319+0.115 * 0.9377
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9354+4.679 * -0.0121-0.327 * 1.0405
=-2.47

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $1,433 Mil.
Revenue was 1676 + 1568 + 1610 + 1411 = $6,265 Mil.
Gross Profit was 1078 + 1039 + 1095 + 929 = $4,141 Mil.
Total Current Assets was $2,491 Mil.
Total Assets was $16,014 Mil.
Property, Plant and Equipment(Net PPE) was $554 Mil.
Depreciation, Depletion and Amortization(DDA) was $329 Mil.
Selling, General & Admin. Expense(SGA) was $1,692 Mil.
Total Current Liabilities was $2,604 Mil.
Long-Term Debt was $6,046 Mil.
Net Income was 250 + 280 + 379 + 230 = $1,139 Mil.
Non Operating Income was -31 + 14 + 35 + -4 = $14 Mil.
Cash Flow from Operations was 425 + 420 + 232 + 241 = $1,318 Mil.
Accounts Receivable was $1,371 Mil.
Revenue was 1537 + 1375 + 1467 + 1156 = $5,535 Mil.
Gross Profit was 1062 + 940 + 1030 + 814 = $3,846 Mil.
Total Current Assets was $2,410 Mil.
Total Assets was $14,979 Mil.
Property, Plant and Equipment(Net PPE) was $514 Mil.
Depreciation, Depletion and Amortization(DDA) was $276 Mil.
Selling, General & Admin. Expense(SGA) was $1,598 Mil.
Total Current Liabilities was $1,294 Mil.
Long-Term Debt was $6,482 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)
=(1433 / 6265) / (1371 / 5535)
=0.22873105 / 0.24769648
=0.9234

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)
=(1039 / 5535) / (1078 / 6265)
=0.69485095 / 0.66097366
=1.0513

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 - (2491 + 554) / 16014) / (1 - (2410 + 514) / 14979)
=0.80985388 / 0.80479338
=1.0063

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
=6265 / 5535
=1.1319

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))
=(276 / (276 + 514)) / (329 / (329 + 554))
=0.34936709 / 0.37259343
=0.9377

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)
=(1692 / 6265) / (1598 / 5535)
=0.27007183 / 0.28870822
=0.9354

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)
=((6046 + 2604) / 16014) / ((6482 + 1294) / 14979)
=0.54015237 / 0.51912678
=1.0405

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
=(1139 - 14 - 1318) / 16014
=-0.0121

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 -2.47 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

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.01821.01611.02881.03511.05270.98360.91960.94540.92430.9234
GMI 0.99680.97920.9921.00681.03151.04851.05641.05161.04451.0513
AQI 0.94980.99310.91131.13061.09931.06051.13140.99081.00271.0063
SGI 1.08581.06731.05071.11421.18321.23361.27031.21111.17851.1319
DEPI 1.03251.03141.00610.92730.77570.66320.62290.70550.80210.9377
SGAI 1.00651.02681.04921.04751.02121.00340.96110.95370.95430.9354
LVGI 1.13751.14271.25331.09071.07731.091.02281.02791.03681.0405
TATA 0.0034-0.0052-0.0013-0.0155-0.0194-0.0185-0.0232-0.0119-0.0079-0.0121
M-score -2.44-2.49-2.55-2.41-2.36-2.39-2.38-2.41-2.43-2.47
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