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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.
During the past 13 years, the highest Beneish M-Score of DryShips Inc was 2.80. The lowest was -46.45. And the median was -2.07.
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 * 0.0793||+||0.528 * 1.1337||+||0.404 * 19.4197||+||0.892 * 0.2205||+||0.115 * 0.093|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.7209||+||4.679 * -10.5806||-||0.327 * 1.636|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $9.7 Mil.|
Revenue was 11.86 + 23.766 + 50.766 + 403.182 = $489.6 Mil.
Gross Profit was -5.849 + -0.89 + 5.04 + 246.433 = $244.7 Mil.
Total Current Assets was $133.7 Mil.
Total Assets was $287.1 Mil.
Property, Plant and Equipment(Net PPE) was $95.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $109.8 Mil.
Selling, General & Admin. Expense(SGA) was $71.5 Mil.
Total Current Liabilities was $280.0 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -106.815 + -527.619 + -819.962 + -1440.323 = $-2,894.7 Mil.
Non Operating Income was -2.382 + 1345.567 + -14.6 + -1363.677 = $-35.1 Mil.
Cash Flow from Operations was -5.484 + -13.463 + 19.302 + 177.86 = $178.2 Mil.
|Accounts Receivable was $554.2 Mil.
Revenue was 492.111 + 598.411 + 601.954 + 527.673 = $2,220.1 Mil.
Gross Profit was 282.882 + 344.061 + 346.939 + 284.334 = $1,258.2 Mil.
Total Current Assets was $1,837.8 Mil.
Total Assets was $10,764.9 Mil.
Property, Plant and Equipment(Net PPE) was $8,815.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $461.2 Mil.
Selling, General & Admin. Expense(SGA) was $188.5 Mil.
Total Current Liabilities was $1,651.5 Mil.
Long-Term Debt was $4,766.4 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)|
|=||(9.696 / 489.574)||/||(554.188 / 2220.149)|
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)|
|=||(1258.216 / 2220.149)||/||(244.734 / 489.574)|
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 - (133.703 + 95.566) / 287.115)||/||(1 - (1837.793 + 8815.412) / 10764.887)|
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))|
|=||(461.211 / (461.211 + 8815.412))||/||(109.818 / (109.818 + 95.566))|
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)|
|=||(71.514 / 489.574)||/||(188.454 / 2220.149)|
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 + 280.043) / 287.115)||/||((4766.393 + 1651.45) / 10764.887)|
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|
|=||(-2894.719 - -35.092||-||178.215)||/||287.115|
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 -46.45 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