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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 CSX Corp was -2.41. The lowest was -3.43. And the median was -2.71.
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 CSX Corp 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 * 1.0499||+||0.528 * 0.9644||+||0.404 * 1.0072||+||0.892 * 0.9395||+||0.115 * 0.9885|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0237||+||4.679 * -0.0332||-||0.327 * 1.0232|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was €889 Mil.|
Revenue was 2878.94587165 + 2414.6841308 + 2406.5503738 + 2350.93390805 = €10,051 Mil.
Gross Profit was 2089.29756375 + 1714.33663013 + 1698.11320755 + 1628.05316092 = €7,130 Mil.
Total Current Assets was €2,358 Mil.
Total Assets was €33,571 Mil.
Property, Plant and Equipment(Net PPE) was €29,529 Mil.
Depreciation, Depletion and Amortization(DDA) was €1,181 Mil.
Selling, General & Admin. Expense(SGA) was €2,868 Mil.
Total Current Liabilities was €1,934 Mil.
Long-Term Debt was €10,392 Mil.
Net Income was 434.16437577 + 405.417446316 + 396.048415806 + 319.683908046 = €1,555 Mil.
Non Operating Income was -101.4314153 + 11.583355609 + 7.11997152011 + 6.28591954023 = €-76 Mil.
Cash Flow from Operations was 524.220305242 + 798.360509668 + 745.817016732 + 677.083333333 = €2,745 Mil.
|Accounts Receivable was €901 Mil.
Revenue was 2553.01569815 + 2618.72939499 + 2730.10781431 + 2796.82158366 = €10,699 Mil.
Gross Profit was 1746.07546131 + 1801.65731088 + 1907.68956607 + 1863.62376421 = €7,319 Mil.
Total Current Assets was €2,607 Mil.
Total Assets was €31,897 Mil.
Property, Plant and Equipment(Net PPE) was €27,700 Mil.
Depreciation, Depletion and Amortization(DDA) was €1,094 Mil.
Selling, General & Admin. Expense(SGA) was €2,982 Mil.
Total Current Liabilities was €1,792 Mil.
Long-Term Debt was €9,653 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)|
|=||(889.183808892 / 10051.1142843)||/||(901.496373818 / 10698.6744911)|
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)|
|=||(7319.04610246 / 10698.6744911)||/||(7129.80056235 / 10051.1142843)|
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 - (2357.56943786 + 29528.8652953) / 33570.9545929)||/||(1 - (2607.17892224 + 27700.3580281) / 31896.6308639)|
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))|
|=||(1094.49759317 / (1094.49759317 + 27700.3580281))||/||(1180.88813648 / (1180.88813648 + 29528.8652953))|
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)|
|=||(2868.0285221 / 10051.1142843)||/||(2981.99396299 / 10698.6744911)|
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)|
|=||((10391.5063039 + 1933.83259077) / 33570.9545929)||/||((9652.98815753 + 1791.97649867) / 31896.6308639)|
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|
|=||(1555.31414594 - -76.4421686307||-||2745.48116498)||/||33570.9545929|
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.
CSX Corp has a M-score of -2.67 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
CSX Corp Annual Data
CSX Corp Quarterly Data