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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 -2.37 suggests that the company is not a manipulator.
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.
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 * 0.9196||+||0.528 * 1.0564||+||0.404 * 1.1314||+||0.892 * 1.2703||+||0.115 * 0.6229|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9464||+||4.679 * -0.0216||-||0.327 * 1.0228|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|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 $1,617 Mil.
Total Current Liabilities was $1,253 Mil.
Long-Term Debt was $6,900 Mil.
Net Income was 230 + 289 + 255 + 300 = $1,074 Mil.
Non Operating Income was -4 + 16 + 0 + -3 = $9 Mil.
Cash Flow from Operations was 241 + 355 + 460 + 339 = $1,395 Mil.
|Accounts Receivable was $1,148 Mil.
Revenue was 1156 + 1200 + 1076 + 1126 = $4,558 Mil.
Gross Profit was 814 + 872 + 780 + 828 = $3,294 Mil.
Total Current Assets was $4,013 Mil.
Total Assets was $14,421 Mil.
Property, Plant and Equipment(Net PPE) was $377 Mil.
Depreciation, Depletion and Amortization(DDA) was $119 Mil.
Selling, General & Admin. Expense(SGA) was $1,345 Mil.
Total Current Liabilities was $1,101 Mil.
Long-Term Debt was $6,407 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(1341 / 5790)||/||(1148 / 4558)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(1062 / 4558)||/||(929 / 5790)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (2740 + 522) / 15311)||/||(1 - (4013 + 377) / 14421)|
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.
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))|
|=||(119 / (119 + 377))||/||(327 / (327 + 522))|
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)|
|=||(1617 / 5790)||/||(1345 / 4558)|
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)|
|=||((6900 + 1253) / 15311)||/||((6407 + 1101) / 14421)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(1074 - 9||-||1395)||/||15311|
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 -2.37 suggests that the company will not be a manipulator.
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
Discovery Communications Inc Annual Data
Discovery Communications Inc Quarterly Data