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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.
Molycorp Inc has a M-score of -3.33 suggests that the company is not a manipulator.
During the past 5 years, the highest Beneish M-Score of Molycorp Inc was 6.34. The lowest was -11.24. And the median was -3.57.
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 Molycorp 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 * 1.1246||+||0.528 * 0.2988||+||0.404 * 0.9235||+||0.892 * 0.8181||+||0.115 * 0.873|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9622||+||4.679 * -0.0795||-||0.327 * 1.0738|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $47.0 Mil.|
Revenue was 116.907 + 118.526 + 123.81 + 149.066 = $508.3 Mil.
Gross Profit was -16.571 + -23.094 + -26.766 + -17.778 = $-84.2 Mil.
Total Current Assets was $419.3 Mil.
Total Assets was $2,831.2 Mil.
Property, Plant and Equipment(Net PPE) was $1,743.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $107.1 Mil.
Selling, General & Admin. Expense(SGA) was $93.5 Mil.
Total Current Liabilities was $128.7 Mil.
Long-Term Debt was $1,378.7 Mil.
Net Income was -83.899 + -86.061 + -194.311 + -69.929 = $-434.2 Mil.
Non Operating Income was 0.296 + 0.474 + -10.375 + -0.891 = $-10.5 Mil.
Cash Flow from Operations was -72.463 + -45.785 + -64.338 + -15.972 = $-198.6 Mil.
|Accounts Receivable was $51.1 Mil.
Revenue was 136.112 + 146.367 + 133.611 + 205.205 = $621.3 Mil.
Gross Profit was -18.036 + -4.536 + -19.544 + 11.366 = $-30.8 Mil.
Total Current Assets was $584.7 Mil.
Total Assets was $3,087.2 Mil.
Property, Plant and Equipment(Net PPE) was $1,713.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $91.1 Mil.
Selling, General & Admin. Expense(SGA) was $118.8 Mil.
Total Current Liabilities was $181.6 Mil.
Long-Term Debt was $1,349.0 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)|
|=||(47.031 / 508.309)||/||(51.117 / 621.295)|
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)|
|=||(-23.094 / 621.295)||/||(-16.571 / 508.309)|
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 - (419.292 + 1743.494) / 2831.246)||/||(1 - (584.662 + 1713.258) / 3087.182)|
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))|
|=||(91.118 / (91.118 + 1713.258))||/||(107.05 / (107.05 + 1743.494))|
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)|
|=||(93.502 / 508.309)||/||(118.776 / 621.295)|
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)|
|=||((1378.669 + 128.703) / 2831.246)||/||((1348.99 + 181.641) / 3087.182)|
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|
|=||(-434.2 - -10.496||-||-198.558)||/||2831.246|
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.
Molycorp Inc has a M-score of -3.33 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
Molycorp Inc Annual Data
Molycorp Inc Quarterly Data