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Discovery Communications Inc (NAS:DISCK)
Beneish M-Score
-2.41 (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 -2.41 suggests that the company is not a manipulator.

DISCK' s 10-Year Beneish M-Score Range
Min: -7.17   Max: 4.99
Current: -2.41

-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 -2.41.


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 * 0.9454+0.528 * 1.0516+0.404 * 0.9908+0.892 * 1.2111+0.115 * 0.7055
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.948+4.679 * -0.0113-0.327 * 1.0279
=-2.41

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $1,525 Mil.
Revenue was 1610 + 1411 + 1537 + 1375 = $5,933 Mil.
Gross Profit was 1095 + 929 + 1062 + 940 = $4,026 Mil.
Total Current Assets was $2,571 Mil.
Total Assets was $16,105 Mil.
Property, Plant and Equipment(Net PPE) was $538 Mil.
Depreciation, Depletion and Amortization(DDA) was $324 Mil.
Selling, General & Admin. Expense(SGA) was $1,644 Mil.
Total Current Liabilities was $2,360 Mil.
Long-Term Debt was $6,045 Mil.
Net Income was 379 + 230 + 289 + 255 = $1,153 Mil.
Non Operating Income was 35 + -4 + 16 + 0 = $47 Mil.
Cash Flow from Operations was 232 + 241 + 355 + 460 = $1,288 Mil.
Accounts Receivable was $1,332 Mil.
Revenue was 1467 + 1156 + 1200 + 1076 = $4,899 Mil.
Gross Profit was 1030 + 814 + 872 + 780 = $3,496 Mil.
Total Current Assets was $2,265 Mil.
Total Assets was $14,687 Mil.
Property, Plant and Equipment(Net PPE) was $460 Mil.
Depreciation, Depletion and Amortization(DDA) was $166 Mil.
Selling, General & Admin. Expense(SGA) was $1,432 Mil.
Total Current Liabilities was $1,002 Mil.
Long-Term Debt was $6,455 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)
=(1525 / 5933) / (1332 / 4899)
=0.25703691 / 0.27189222
=0.9454

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)
=(929 / 4899) / (1095 / 5933)
=0.71361502 / 0.67857745
=1.0516

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 - (2571 + 538) / 16105) / (1 - (2265 + 460) / 14687)
=0.80695436 / 0.81446177
=0.9908

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
=5933 / 4899
=1.2111

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))
=(166 / (166 + 460)) / (324 / (324 + 538))
=0.26517572 / 0.37587007
=0.7055

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)
=(1644 / 5933) / (1432 / 4899)
=0.27709422 / 0.29230455
=0.948

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)
=((6045 + 2360) / 16105) / ((6455 + 1002) / 14687)
=0.52188761 / 0.50772792
=1.0279

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
=(1153 - 47 - 1288) / 16105
=-0.0113

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 -2.41 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

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1.07081.12591.01821.01611.02881.03511.05270.98360.91960.9454
GMI 1.01961.01530.99680.97920.9921.00681.03151.04851.05641.0516
AQI 0.93280.93360.94980.99310.91131.13061.09931.06051.13140.9908
SGI 1.14521.12981.08581.06731.05071.11421.18321.23361.27031.2111
DEPI 1.02571.00261.03251.03141.00610.92730.77570.66320.62290.7055
SGAI 0.91920.94031.00651.02681.04921.04751.01380.99720.95520.948
LVGI 1.0871.13621.13751.14271.25331.09071.07731.091.02281.0279
TATA -0.00070.00870.0034-0.0052-0.0013-0.0155-0.0186-0.0178-0.0225-0.0113
M-score -2.32-2.26-2.44-2.49-2.55-2.41-2.35-2.39-2.38-2.41
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