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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 2.31. The lowest was -46.46. And the median was -2.20.
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 * 3.1867||+||0.528 * -24.9482||+||0.404 * 0.2146||+||0.892 * 0.0475||+||0.115 * 1.3672|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 6.1541||+||4.679 * -6.048||-||0.327 * 2.2091|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $6.94 Mil.|
Revenue was 13.177 + 11.86 + 23.766 + 50.766 = $99.57 Mil.
Gross Profit was -0.625 + -5.849 + -0.89 + 5.04 = $-2.32 Mil.
Total Current Assets was $132.64 Mil.
Total Assets was $237.56 Mil.
Property, Plant and Equipment(Net PPE) was $94.71 Mil.
Depreciation, Depletion and Amortization(DDA) was $19.84 Mil.
Selling, General & Admin. Expense(SGA) was $50.93 Mil.
Total Current Liabilities was $234.15 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -9.108 + -106.815 + -527.619 + -819.962 = $-1,463.50 Mil.
Non Operating Income was -1.284 + -2.382 + 1345.567 + -1361.706 = $-19.80 Mil.
Cash Flow from Operations was -7.318 + -5.484 + -13.463 + 19.302 = $-6.96 Mil.
|Accounts Receivable was $45.86 Mil.
Revenue was 403.182 + 492.111 + 598.411 + 601.954 = $2,095.66 Mil.
Gross Profit was 246.433 + 282.882 + 344.061 + 346.939 = $1,220.32 Mil.
Total Current Assets was $675.71 Mil.
Total Assets was $2,615.94 Mil.
Property, Plant and Equipment(Net PPE) was $1,416.23 Mil.
Depreciation, Depletion and Amortization(DDA) was $439.39 Mil.
Selling, General & Admin. Expense(SGA) was $174.19 Mil.
Total Current Liabilities was $1,167.16 Mil.
Long-Term Debt was $0.00 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)|
|=||(6.944 / 99.569)||/||(45.863 / 2095.658)|
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)|
|=||(1220.315 / 2095.658)||/||(-2.324 / 99.569)|
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 - (132.638 + 94.705) / 237.557)||/||(1 - (675.714 + 1416.225) / 2615.936)|
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))|
|=||(439.393 / (439.393 + 1416.225))||/||(19.839 / (19.839 + 94.705))|
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)|
|=||(50.931 / 99.569)||/||(174.185 / 2095.658)|
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 + 234.15) / 237.557)||/||((0 + 1167.156) / 2615.936)|
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|
|=||(-1463.504 - -19.805||-||-6.963)||/||237.557|
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 -44.87 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