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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 -3.86. And the median was -2.43.
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 * 0.858||+||0.528 * 0.9322||+||0.404 * 0.634||+||0.892 * 1.4648||+||0.115 * 0.8258|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.6261||+||4.679 * -0.0496||-||0.327 * 0.9592|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $405 Mil.|
Revenue was 598.411 + 601.954 + 527.673 + 457.486 = $2,186 Mil.
Gross Profit was 344.061 + 346.939 + 284.334 + 248.765 = $1,224 Mil.
Total Current Assets was $1,227 Mil.
Total Assets was $10,372 Mil.
Property, Plant and Equipment(Net PPE) was $9,025 Mil.
Depreciation, Depletion and Amortization(DDA) was $783 Mil.
Selling, General & Admin. Expense(SGA) was $194 Mil.
Total Current Liabilities was $1,622 Mil.
Long-Term Debt was $4,353 Mil.
Net Income was -23.997 + 16.67 + -5.634 + -34.551 = $-48 Mil.
Non Operating Income was 111.469 + -110.065 + 46.666 + -56.531 = $-8 Mil.
Cash Flow from Operations was 208.662 + 68.57 + 162.459 + 35.417 = $475 Mil.
|Accounts Receivable was $322 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 $618 Mil.
Selling, General & Admin. Expense(SGA) was $211 Mil.
Total Current Liabilities was $2,172 Mil.
Long-Term Debt was $3,908 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)|
|=||(404.656 / 2185.524)||/||(321.989 / 1492.014)|
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)|
|=||(346.939 / 1492.014)||/||(344.061 / 2185.524)|
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 - (1227.277 + 9025.348) / 10371.603)||/||(1 - (1184.199 + 8756.326) / 10123.692)|
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))|
|=||(618.238 / (618.238 + 8756.326))||/||(783.33 / (783.33 + 9025.348))|
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)|
|=||(193.686 / 2185.524)||/||(211.182 / 1492.014)|
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)|
|=||((4352.592 + 1621.76) / 10371.603)||/||((3907.835 + 2171.714) / 10123.692)|
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|
|=||(-47.512 - -8.461||-||475.108)||/||10371.603|
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 -2.55 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