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Beneish M-Score 11.82 higher than -2.22, which implies that it might have manipulated its financial results.
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.
During the past 13 years, the highest Beneish M-Score of DryShips Inc was 11.82. The lowest was -25.91. And the median was -2.28.
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 DryShips 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 * 10.8985||+||0.528 * -24.6495||+||0.404 * 0.1066||+||0.892 * 0.0428||+||0.115 * 29.7215|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 6.4941||+||4.679 * -2.6645||-||0.327 * 1.9229|
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $6.85 Mil.|
Revenue was 17.247 + 13.177 + 11.86 + 23.766 = $66.05 Mil.
Gross Profit was 5.84 + -0.625 + -5.849 + -0.89 = $-1.52 Mil.
Total Current Assets was $126.54 Mil.
Total Assets was $229.73 Mil.
Property, Plant and Equipment(Net PPE) was $93.83 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.27 Mil.
Selling, General & Admin. Expense(SGA) was $40.19 Mil.
Total Current Liabilities was $216.72 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -5.247 + -9.108 + -106.815 + -527.619 = $-648.79 Mil.
Non Operating Income was 0.144 + -1.284 + -2.382 + -1.539 = $-5.06 Mil.
Cash Flow from Operations was -5.346 + -7.318 + -5.484 + -13.463 = $-31.61 Mil.
|Accounts Receivable was $14.70 Mil.
Revenue was 50.766 + 403.182 + 492.111 + 598.411 = $1,544.47 Mil.
Gross Profit was 5.04 + 246.433 + 282.882 + 344.061 = $878.42 Mil.
Total Current Assets was $765.87 Mil.
Total Assets was $1,239.36 Mil.
Property, Plant and Equipment(Net PPE) was $0.00 Mil.
Depreciation, Depletion and Amortization(DDA) was $343.23 Mil.
Selling, General & Admin. Expense(SGA) was $144.71 Mil.
Total Current Liabilities was $608.03 Mil.
Long-Term Debt was $0.00 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)|
|=||(6.85 / 66.05)||/||(14.697 / 1544.47)|
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)|
|=||(878.416 / 1544.47)||/||(-1.524 / 66.05)|
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 - (126.537 + 93.833) / 229.727)||/||(1 - (765.867 + 0) / 1239.358)|
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))|
|=||(343.234 / (343.234 + 0))||/||(3.267 / (3.267 + 93.833))|
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)|
|=||(40.189 / 66.05)||/||(144.708 / 1544.47)|
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)|
|=||((0 + 216.719) / 229.727)||/||((0 + 608.028) / 1239.358)|
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|
|=||(-648.789 - -5.061||-||-31.611)||/||229.727|
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.
DryShips Inc has a M-score of -18.54 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
DryShips Inc Annual Data
DryShips Inc Quarterly Data