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Beneish M-Score 2.3 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 -6.32. And the median was -1.96.
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 * 0.042||+||0.528 * 0.9722||+||0.404 * 29.6586||+||0.892 * 0.7652||+||0.115 * 0.0449|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9869||+||4.679 * -1.207||-||0.327 * 0.8029|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $15 Mil.|
Revenue was 50.766 + 403.182 + 492.111 + 598.411 = $1,544 Mil.
Gross Profit was 5.04 + 246.433 + 282.882 + 344.061 = $878 Mil.
Total Current Assets was $766 Mil.
Total Assets was $1,239 Mil.
Property, Plant and Equipment(Net PPE) was $0 Mil.
Depreciation, Depletion and Amortization(DDA) was $343 Mil.
Selling, General & Admin. Expense(SGA) was $145 Mil.
Total Current Liabilities was $608 Mil.
Long-Term Debt was $0 Mil.
Net Income was -819.962 + -1440.323 + -59.157 + -23.997 = $-2,343 Mil.
Non Operating Income was -14.6 + -1363.677 + -18.655 + 111.469 = $-1,285 Mil.
Cash Flow from Operations was 19.302 + 177.86 + 32.048 + 208.662 = $438 Mil.
|Accounts Receivable was $457 Mil.
Revenue was 601.954 + 527.673 + 457.486 + 431.352 = $2,018 Mil.
Gross Profit was 346.939 + 284.334 + 248.765 + 236.034 = $1,116 Mil.
Total Current Assets was $1,226 Mil.
Total Assets was $10,506 Mil.
Property, Plant and Equipment(Net PPE) was $9,145 Mil.
Depreciation, Depletion and Amortization(DDA) was $430 Mil.
Selling, General & Admin. Expense(SGA) was $192 Mil.
Total Current Liabilities was $2,063 Mil.
Long-Term Debt was $4,357 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)|
|=||(14.697 / 1544.47)||/||(456.884 / 2018.465)|
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)|
|=||(246.433 / 2018.465)||/||(5.04 / 1544.47)|
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 - (765.867 + 0) / 1239.358)||/||(1 - (1226.158 + 9144.549) / 10506.04)|
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))|
|=||(430.044 / (430.044 + 9144.549))||/||(343.234 / (343.234 + 0))|
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)|
|=||(144.708 / 1544.47)||/||(191.625 / 2018.465)|
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 + 608.028) / 1239.358)||/||((4356.628 + 2063.197) / 10506.04)|
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|
|=||(-2343.439 - -1285.463||-||437.872)||/||1239.358|
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 2.30 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