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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.
DryShips, Inc. has a M-score of -2.45 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of DryShips, Inc. was 1.27. The lowest was -3.37. And the median was -2.39.
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 * 1.3577||+||0.528 * 0.8394||+||0.404 * 0.602||+||0.892 * 1.2329||+||0.115 * 1.0636|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.059||+||4.679 * -0.0474||-||0.327 * 1.0975|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $361 Mil.|
Revenue was 431.352 + 404.941 + 336.008 + 319.713 = $1,492 Mil.
Gross Profit was 236.034 + 224.808 + 168.849 + 149.347 = $779 Mil.
Total Current Assets was $1,184 Mil.
Total Assets was $10,124 Mil.
Property, Plant and Equipment(Net PPE) was $8,756 Mil.
Depreciation, Depletion and Amortization(DDA) was $357 Mil.
Selling, General & Admin. Expense(SGA) was $223 Mil.
Total Current Liabilities was $2,172 Mil.
Long-Term Debt was $3,908 Mil.
Net Income was -24.369 + -63.879 + -18.21 + -116.635 = $-223 Mil.
Non Operating Income was -5.95 + -9.599 + 25.093 + 1.074 = $11 Mil.
Cash Flow from Operations was 192.813 + 48.852 + -101.998 + 106.313 = $246 Mil.
|Accounts Receivable was $216 Mil.
Revenue was 282.866 + 343.639 + 336.139 + 247.496 = $1,210 Mil.
Gross Profit was 76.734 + 154.708 + 163.261 + 135.703 = $530 Mil.
Total Current Assets was $904 Mil.
Total Assets was $8,878 Mil.
Property, Plant and Equipment(Net PPE) was $7,708 Mil.
Depreciation, Depletion and Amortization(DDA) was $335 Mil.
Selling, General & Admin. Expense(SGA) was $170 Mil.
Total Current Liabilities was $1,574 Mil.
Long-Term Debt was $3,285 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)|
|=||(361.012 / 1492.014)||/||(215.671 / 1210.14)|
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)|
|=||(224.808 / 1210.14)||/||(236.034 / 1492.014)|
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 - (1184.199 + 8756.326) / 10123.692)||/||(1 - (903.529 + 7708.107) / 8878.491)|
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))|
|=||(335.458 / (335.458 + 7708.107))||/||(357.372 / (357.372 + 8756.326))|
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)|
|=||(222.6 / 1492.014)||/||(170.491 / 1210.14)|
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)|
|=||((3907.835 + 2171.714) / 10123.692)||/||((3284.63 + 1573.529) / 8878.491)|
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|
|=||(-223.093 - 10.618||-||245.98)||/||10123.692|
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 -2.45 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