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GuruFocus has detected 4 Warning Signs with DryShips Inc $DRYS.
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DryShips Inc (NAS:DRYS)
Beneish M-Score
-0.94 (As of Today)

Warning Sign:

Beneish M-Score -0.94 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.

DryShips Inc has a M-score of -0.94 signals that the company is a manipulator.

DRYS' s Beneish M-Score Range Over the Past 10 Years
Min: -25.91   Max: 2.25
Current: -0.94

-25.91
2.25

During the past 13 years, the highest Beneish M-Score of DryShips Inc was 2.25. The lowest was -25.91. And the median was -2.28.


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 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 * 13.9755+0.528 * -10.0659+0.404 * 0.0002+0.892 * 0.0535+0.115 * 20.0676
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 7.068+4.679 * -0.944-0.327 * 1.114
=-0.94

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $7.53 Mil.
Revenue was 9.65 + 17.247 + 13.177 + 11.86 = $51.93 Mil.
Gross Profit was -2.204 + 5.84 + -0.625 + -5.849 = $-2.84 Mil.
Total Current Assets was $98.17 Mil.
Total Assets was $193.73 Mil.
Property, Plant and Equipment(Net PPE) was $95.55 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.47 Mil.
Selling, General & Admin. Expense(SGA) was $39.71 Mil.
Total Current Liabilities was $27.34 Mil.
Long-Term Debt was $133.43 Mil.
Net Income was -77.516 + -5.247 + -9.108 + -106.815 = $-198.69 Mil.
Non Operating Income was 13.073 + 0.144 + -1.284 + -2.382 = $9.55 Mil.
Cash Flow from Operations was -7.208 + -5.346 + -7.318 + -5.484 = $-25.36 Mil.
Accounts Receivable was $10.06 Mil.
Revenue was 23.766 + 50.766 + 403.182 + 492.111 = $969.83 Mil.
Gross Profit was -0.89 + 5.04 + 246.433 + 282.882 = $533.47 Mil.
Total Current Assets was $269.07 Mil.
Total Assets was $476.05 Mil.
Property, Plant and Equipment(Net PPE) was $96.43 Mil.
Depreciation, Depletion and Amortization(DDA) was $227.65 Mil.
Selling, General & Admin. Expense(SGA) was $104.91 Mil.
Total Current Liabilities was $354.64 Mil.
Long-Term Debt was $0.00 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)
=(7.528 / 51.934) / (10.059 / 969.825)
=0.14495321 / 0.01037197
=13.9755

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)
=(533.465 / 969.825) / (-2.838 / 51.934)
=0.55006316 / -0.05464628
=-10.0659

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 - (98.17 + 95.55) / 193.73) / (1 - (269.067 + 96.428) / 476.052)
=5.162E-5 / 0.23223723
=0.0002

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
=51.934 / 969.825
=0.0535

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))
=(227.652 / (227.652 + 96.428)) / (3.466 / (3.466 + 95.55))
=0.70245618 / 0.03500444
=20.0676

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)
=(39.708 / 51.934) / (104.912 / 969.825)
=0.76458582 / 0.10817622
=7.068

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)
=((133.428 + 27.339) / 193.73) / ((0 + 354.64) / 476.052)
=0.82985082 / 0.74496063
=1.114

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
=(-198.686 - 9.551 - -25.356) / 193.73
=-0.944

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 -0.94 signals that the company is likely to 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 local exchange's currency.

DryShips Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 2.56221.47631.67610.36044.43051.11331.49250.8580.05613.9755
GMI 0.88621.051.10940.96281.1761.4480.83940.93221.0182-10.0659
AQI 7.12470.06640.790610.12730.57180.54040.6020.634820.22080.0002
SGI 2.3451.85510.75861.04871.25351.12291.23291.46480.44370.0535
DEPI 1.19141.11170.90871.15991.01570.83821.06360.8260.067620.0676
SGAI 2.667.87361.85170.24111.11011.35320.94420.60651.22067.068
LVGI 0.89561.24530.72540.84351.26591.03251.09750.95841.29441.114
TATA 0.033-0.1406-0.0568-0.0255-0.0417-0.0484-0.0325-0.0368-6.3259-0.944
M-score 2.50-3.54-2.430.720.52-2.53-2.23-2.49-25.91-0.94

DryShips Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.1960.8581.11060.11350.0420.0560.07933.186710.898513.9755
GMI 0.83420.93220.95110.93710.97221.01821.1337-24.9482-24.6495-10.0659
AQI 0.79010.63480.51379.726929.658620.220819.41980.21460.10660.0002
SGI 1.50241.46481.36221.15050.76520.44370.22050.04750.04280.0535
DEPI 0.88490.8260.81140.1790.04490.06760.0931.367229.721520.0676
SGAI 0.53140.6280.71990.78910.98691.21711.72095.67716.49417.068
LVGI 1.04220.95840.96250.72410.80291.29441.6362.20911.92291.114
TATA -0.0399-0.0427-0.0466-0.7425-2.1867-6.3259-10.5806-6.048-2.6645-0.944
M-score -2.16-2.52-2.46-3.11-2.28-25.91-46.45-44.79-18.54-0.94
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