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DryShips Inc (NAS:DRYS)
Beneish M-Score
2.30 (As of Today)

Warning Sign:

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.

DryShips Inc has a M-score of 2.30 signals that the company is a manipulator.

DRYS' s Beneish M-Score Range Over the Past 10 Years
Min: -6.32   Max: 2.34
Current: 2.3

-6.32
2.34

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.


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 * 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
=2.30

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

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

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)
=(14.697 / 1544.47) / (456.884 / 2018.465)
=0.00951589 / 0.2263522
=0.042

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)
=(246.433 / 2018.465) / (5.04 / 1544.47)
=0.55293106 / 0.56874915
=0.9722

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 - (765.867 + 0) / 1239.358) / (1 - (1226.158 + 9144.549) / 10506.04)
=0.38204538 / 0.01288145
=29.6586

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
=1544.47 / 2018.465
=0.7652

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))
=0.04491512 / 1
=0.0449

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)
=0.09369428 / 0.094936
=0.9869

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)
=0.49059917 / 0.6110604
=0.8029

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
=(-2343.439 - -1285.463 - 437.872) / 1239.358
=-1.207

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.


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 own currency.

DryShips Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.70510.53262.56221.47631.67610.36044.43051.11331.49250.858
GMI 0.93781.07170.88621.051.10940.96281.1761.4480.83940.9322
AQI 0.08750.86437.12470.06640.790610.12730.57180.54040.6020.634
SGI 3.60731.08532.3451.85510.75861.04871.25351.12291.23291.4648
DEPI 1.88770.89691.19141.11170.90871.15991.01570.83821.06360.826
SGAI 5.25080.60252.667.87361.85170.24111.11011.28550.99390.6065
LVGI 0.59351.00950.89561.24530.72540.84351.26591.03251.09750.9592
TATA -0.0578-0.03670.033-0.1406-0.0568-0.0255-0.0417-0.0484-0.0474-0.0496
M-score -1.59-2.972.50-3.54-2.430.720.52-2.52-2.31-2.55

DryShips Inc Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 1.52861.50271.49251.34541.05481.1960.8581.11060.11350.042
GMI 1.34941.13460.83940.78710.78550.83420.93220.95110.93710.9722
AQI 0.60390.32980.6020.55920.66060.79010.6340.51379.726929.6586
SGI 1.04261.07021.23291.27091.42051.50241.46481.36221.15050.7652
DEPI 0.97951.05591.06361.0270.97580.88490.8260.81140.1790.0449
SGAI 1.57921.58821.00470.7390.65240.5530.6280.71990.78910.9869
LVGI 1.04281.09131.09751.12591.12961.04220.95920.96250.72410.8029
TATA -0.0451-0.0411-0.0578-0.037-0.058-0.0542-0.0555-0.0589-0.2783-1.207
M-score -2.26-2.47-2.36-2.38-2.56-2.23-2.58-2.51-0.942.30
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