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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 12 years, the highest Beneish M-Score of Focus Media Holding, Ltd. was 0.00. The lowest was 0.00. And the median was 0.00.
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 Focus Media Holding, Ltd. 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 * 0.9575||+||0.528 * 0.975||+||0.404 * 0.973||+||0.892 * 1.1818||+||0.115 * 0.9369|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0257||+||4.679 * -0.0608||-||0.327 * 1.0034|
|This Year (Dec12) TTM:||Last Year (Dec11) TTM:|
|Accounts Receivable was $284.1 Mil.|
Revenue was 247.846 + 256.277 + 233.004 + 199.598 = $936.7 Mil.
Gross Profit was 168.964 + 173.43 + 148.567 + 118.717 = $609.7 Mil.
Total Current Assets was $1,214.9 Mil.
Total Assets was $1,975.9 Mil.
Property, Plant and Equipment(Net PPE) was $66.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $41.5 Mil.
Selling, General & Admin. Expense(SGA) was $333.0 Mil.
Total Current Liabilities was $295.7 Mil.
Long-Term Debt was $200.0 Mil.
Net Income was 76.672 + 64.59 + 58.907 + 37.911 = $238.1 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 142.445 + 77.915 + 93.057 + 44.833 = $358.3 Mil.
|Accounts Receivable was $251.0 Mil.
Revenue was 256.417 + 210.662 + 178.962 + 146.575 = $792.6 Mil.
Gross Profit was 175.439 + 135.56 + 111.753 + 80.221 = $503.0 Mil.
Total Current Assets was $1,032.9 Mil.
Total Assets was $1,741.4 Mil.
Property, Plant and Equipment(Net PPE) was $79.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $44.8 Mil.
Selling, General & Admin. Expense(SGA) was $274.7 Mil.
Total Current Liabilities was $364.4 Mil.
Long-Term Debt was $71.0 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)|
|=||(284.052 / 936.725)||/||(251.031 / 792.616)|
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)|
|=||(502.973 / 792.616)||/||(609.678 / 936.725)|
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 - (1214.854 + 66.073) / 1975.886)||/||(1 - (1032.883 + 79.042) / 1741.437)|
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))|
|=||(44.785 / (44.785 + 79.042))||/||(41.543 / (41.543 + 66.073))|
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)|
|=||(333.02 / 936.725)||/||(274.729 / 792.616)|
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)|
|=||((200 + 295.729) / 1975.886)||/||((71 + 364.41) / 1741.437)|
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|
|=||(238.08 - 0||-||358.25)||/||1975.886|
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.
Focus Media Holding, Ltd. has a M-score of -2.68 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
Focus Media Holding, Ltd. Annual Data
Focus Media Holding, Ltd. Quarterly Data