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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: -3.86   Max: 4.99
Current: -2.38

-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 -2.35.


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 * 0.9836+0.528 * 1.0485+0.404 * 1.0605+0.892 * 1.2336+0.115 * 0.6632
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.989+4.679 * -0.017-0.327 * 1.09
=-2.38

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
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 $1,575 Mil.
Total Current Liabilities was $1,294 Mil.
Long-Term Debt was $6,482 Mil.
Net Income was 289 + 255 + 300 + 231 = $1,075 Mil.
Non Operating Income was 16 + 0 + -3 + 31 = $44 Mil.
Cash Flow from Operations was 355 + 460 + 339 + 131 = $1,285 Mil.
Accounts Receivable was $1,130 Mil.
Revenue was 1200 + 1076 + 1126 + 1085 = $4,487 Mil.
Gross Profit was 872 + 780 + 828 + 789 = $3,269 Mil.
Total Current Assets was $2,730 Mil.
Total Assets was $12,930 Mil.
Property, Plant and Equipment(Net PPE) was $388 Mil.
Depreciation, Depletion and Amortization(DDA) was $117 Mil.
Selling, General & Admin. Expense(SGA) was $1,291 Mil.
Total Current Liabilities was $946 Mil.
Long-Term Debt was $5,212 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)
=(1371 / 5535) / (1130 / 4487)
=0.24769648 / 0.25183864
=0.9836

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)
=(940 / 4487) / (1062 / 5535)
=0.72854914 / 0.69485095
=1.0485

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 - (2410 + 514) / 14979) / (1 - (2730 + 388) / 12930)
=0.80479338 / 0.75885538
=1.0605

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
=5535 / 4487
=1.2336

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))
=(117 / (117 + 388)) / (276 / (276 + 514))
=0.23168317 / 0.34936709
=0.6632

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)
=(1575 / 5535) / (1291 / 4487)
=0.28455285 / 0.28772008
=0.989

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)
=((6482 + 1294) / 14979) / ((5212 + 946) / 12930)
=0.51912678 / 0.47625677
=1.09

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
=(1075 - 44 - 1285) / 14979
=-0.017

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

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

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.06111.04381.07081.12591.01821.01611.02881.03511.05270.9836
GMI 0.98191.01861.01961.01530.99680.97920.9921.00681.03151.0485
AQI 0.9940.94770.93280.93360.94980.99310.91131.13061.09931.0605
SGI 1.09121.13441.14521.12981.08581.06731.05071.11421.18321.2336
DEPI 1.05251.04031.02571.00261.03251.03141.00610.92730.77570.6632
SGAI 0.87440.88450.91920.94031.00651.02681.05081.0381.00490.989
LVGI 1.08671.04781.0871.13621.13751.14271.25331.09071.07731.09
TATA 0.00360.0054-0.00070.00870.0034-0.0052-0.0015-0.0146-0.0178-0.017
M-score -2.34-2.30-2.32-2.26-2.44-2.49-2.55-2.40-2.35-2.38
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