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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 2.48. The lowest was -6.32. 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 * 1.196||+||0.528 * 0.8342||+||0.404 * 0.7901||+||0.892 * 1.5024||+||0.115 * 0.9487|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.5688||+||4.679 * -0.0484||-||0.327 * 1.0422|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|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 $691 Mil.
Selling, General & Admin. Expense(SGA) was $197 Mil.
Total Current Liabilities was $2,063 Mil.
Long-Term Debt was $4,357 Mil.
Net Income was 16.67 + -5.634 + -34.551 + -24.369 = $-48 Mil.
Non Operating Income was -110.065 + 46.666 + -56.531 + 121.364 = $1 Mil.
Cash Flow from Operations was 68.57 + 162.459 + 35.417 + 192.813 = $459 Mil.
|Accounts Receivable was $254 Mil.
Revenue was 404.941 + 336.008 + 319.713 + 282.866 = $1,344 Mil.
Gross Profit was 224.808 + 168.849 + 149.347 + 76.734 = $620 Mil.
Total Current Assets was $1,069 Mil.
Total Assets was $9,577 Mil.
Property, Plant and Equipment(Net PPE) was $8,352 Mil.
Depreciation, Depletion and Amortization(DDA) was $596 Mil.
Selling, General & Admin. Expense(SGA) was $231 Mil.
Total Current Liabilities was $1,463 Mil.
Long-Term Debt was $4,153 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)|
|=||(456.884 / 2018.465)||/||(254.267 / 1343.528)|
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)|
|=||(284.334 / 1343.528)||/||(346.939 / 2018.465)|
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 - (1226.158 + 9144.549) / 10506.04)||/||(1 - (1069.08 + 8352.117) / 9577.349)|
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))|
|=||(596.324 / (596.324 + 8352.117))||/||(690.91 / (690.91 + 9144.549))|
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)|
|=||(197.08 / 2018.465)||/||(230.643 / 1343.528)|
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)|
|=||((4356.628 + 2063.197) / 10506.04)||/||((4152.708 + 1462.931) / 9577.349)|
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|
|=||(-47.884 - 1.434||-||459.259)||/||10506.04|
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 -2.20 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