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Discovery Communications Inc (NAS:DISCK)
Beneish M-Score
-2.50 (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 -2.50 suggests that the company is not a manipulator.

DISCK' s Beneish M-Score Range Over the Past 10 Years
Min: -3.86   Max: 4.99
Current: -2.5

-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 -2.46.


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 * 1.0113+0.528 * 1.0433+0.404 * 0.9954+0.892 * 1.0206+0.115 * 0.9236
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9665+4.679 * -0.0093-0.327 * 1.0756
=-2.50

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $1,479 Mil.
Revenue was 1646 + 1557 + 1654 + 1537 = $6,394 Mil.
Gross Profit was 1006 + 983 + 1090 + 972 = $4,051 Mil.
Total Current Assets was $2,596 Mil.
Total Assets was $15,864 Mil.
Property, Plant and Equipment(Net PPE) was $488 Mil.
Depreciation, Depletion and Amortization(DDA) was $330 Mil.
Selling, General & Admin. Expense(SGA) was $1,669 Mil.
Total Current Liabilities was $1,579 Mil.
Long-Term Debt was $7,616 Mil.
Net Income was 219 + 279 + 286 + 250 = $1,034 Mil.
Non Operating Income was -16 + -10 + -52 + -18 = $-96 Mil.
Cash Flow from Operations was 625 + 258 + 331 + 63 = $1,277 Mil.
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 $15,970 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 $6,002 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)
=(1479 / 6394) / (1433 / 6265)
=0.2313106 / 0.22873105
=1.0113

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)
=(983 / 6265) / (1006 / 6394)
=0.66097366 / 0.63356272
=1.0433

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 - (2596 + 488) / 15864) / (1 - (2491 + 554) / 15970)
=0.80559758 / 0.80932999
=0.9954

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
=6394 / 6265
=1.0206

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))
=(329 / (329 + 554)) / (330 / (330 + 488))
=0.37259343 / 0.40342298
=0.9236

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)
=(1669 / 6394) / (1692 / 6265)
=0.26102596 / 0.27007183
=0.9665

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)
=((7616 + 1579) / 15864) / ((6002 + 2604) / 15970)
=0.57961422 / 0.53888541
=1.0756

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
=(1034 - -96 - 1277) / 15864
=-0.0093

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 -2.50 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.10220.066216.02171.01941.00991.05491.02350.98360.92341.0113
GMI 1.05461.11060.43511.00790.97411.00950.9731.04851.05131.0433
AQI 1.01241.04190.91540.94580.99540.94770.99311.06051.00560.9954
SGI 0.99081.02784.86841.02121.07311.12241.05951.23361.13191.0206
DEPI 1.17950.2092.51681.34641.10550.34623.09910.66320.93770.9236
SGAI 1.05280.82661.51991.09520.88560.88941.030.9890.94910.9665
LVGI 1.34440.984420.52040.92221.02741.04781.14271.091.03811.0756
TATA -0.0396-0.0484-0.0196-0.00860.01880.0054-0.0052-0.017-0.0121-0.0093
M-score -2.65-3.528.07-2.45-2.31-2.38-2.26-2.38-2.47-2.50

Discovery Communications Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.05270.98360.91960.94540.92430.92340.96680.90991.11321.0113
GMI 1.03151.04851.05641.05161.04451.05131.0451.04491.04921.0433
AQI 1.09931.06051.13140.99081.00271.00561.02891.00470.98480.9954
SGI 1.18321.23361.27031.21111.17851.13191.10381.08461.04861.0206
DEPI 0.77570.66320.62290.70550.80210.93771.01410.94870.97070.9236
SGAI 1.01851.00660.96390.95640.95680.93540.92860.95150.93840.9665
LVGI 1.07731.091.02281.02791.03681.03811.04731.04381.06971.0756
TATA -0.0191-0.0185-0.0232-0.0119-0.0079-0.01210.0012-0.00550.0062-0.0093
M-score -2.35-2.39-2.38-2.41-2.43-2.47-2.38-2.50-2.30-2.50
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