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Beneish M-Score -0.86 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 2.34. The lowest was -6.35. And the median was -2.02.
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 * 0.1135||+||0.528 * 0.9371||+||0.404 * 9.7269||+||0.892 * 1.1505||+||0.115 * 0.179|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.7827||+||4.679 * -0.2623||-||0.327 * 0.7241|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $46 Mil.|
Revenue was 403.182 + 492.111 + 598.411 + 601.954 = $2,096 Mil.
Gross Profit was 246.433 + 282.882 + 344.061 + 346.939 = $1,220 Mil.
Total Current Assets was $676 Mil.
Total Assets was $2,616 Mil.
Property, Plant and Equipment(Net PPE) was $1,416 Mil.
Depreciation, Depletion and Amortization(DDA) was $439 Mil.
Selling, General & Admin. Expense(SGA) was $177 Mil.
Total Current Liabilities was $1,167 Mil.
Long-Term Debt was $0 Mil.
Net Income was -1440.323 + -59.157 + -23.997 + 16.67 = $-1,507 Mil.
Non Operating Income was -1363.677 + -18.655 + 111.469 + -36.859 = $-1,308 Mil.
Cash Flow from Operations was 177.86 + 32.048 + 208.662 + 68.57 = $487 Mil.
|Accounts Receivable was $351 Mil.
Revenue was 527.673 + 457.486 + 431.352 + 404.941 = $1,821 Mil.
Gross Profit was 284.334 + 248.765 + 236.034 + 224.808 = $994 Mil.
Total Current Assets was $1,163 Mil.
Total Assets was $10,621 Mil.
Property, Plant and Equipment(Net PPE) was $9,239 Mil.
Depreciation, Depletion and Amortization(DDA) was $409 Mil.
Selling, General & Admin. Expense(SGA) was $197 Mil.
Total Current Liabilities was $2,167 Mil.
Long-Term Debt was $4,377 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)|
|=||(45.863 / 2095.658)||/||(351.185 / 1821.452)|
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)|
|=||(282.882 / 1821.452)||/||(246.433 / 2095.658)|
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 - (675.714 + 1416.225) / 2615.936)||/||(1 - (1163.156 + 9239.136) / 10621.015)|
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))|
|=||(408.889 / (408.889 + 9239.136))||/||(439.393 / (439.393 + 1416.225))|
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)|
|=||(176.988 / 2095.658)||/||(196.533 / 1821.452)|
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 + 1167.156) / 2615.936)||/||((4376.552 + 2167.418) / 10621.015)|
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|
|=||(-1506.807 - -1307.722||-||487.14)||/||2615.936|
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 -0.86 signals that the company is likely to 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