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Molycorp Inc (NYSE:MCP)
Beneish M-Score
-3.79 (As of Today)

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 -3.79 suggests that the company is not a manipulator.

MCP' s 10-Year Beneish M-Score Range
Min: -5.63   Max: 6.28
Current: -3.79

-5.63
6.28

During the past 6 years, the highest Beneish M-Score of Molycorp Inc was 6.28. The lowest was -5.63. And the median was -3.60.


Definition

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 * 0.8439+0.528 * 0.7174+0.404 * 0.7231+0.892 * 0.8553+0.115 * 0.8383
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8266+4.679 * -0.1484-0.327 * 1.2846
=-3.79

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $44.6 Mil.
Revenue was 116.243 + 123.937 + 116.907 + 118.526 = $475.6 Mil.
Gross Profit was -44.842 + -15.078 + -16.571 + -23.094 = $-99.6 Mil.
Total Current Assets was $454.9 Mil.
Total Assets was $2,576.0 Mil.
Property, Plant and Equipment(Net PPE) was $1,708.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $123.7 Mil.
Selling, General & Admin. Expense(SGA) was $74.5 Mil.
Total Current Liabilities was $110.1 Mil.
Long-Term Debt was $1,559.8 Mil.
Net Income was -329.794 + -105.179 + -83.899 + -86.061 = $-604.9 Mil.
Non Operating Income was 13.32 + -14.611 + 0.296 + 0.474 = $-0.5 Mil.
Cash Flow from Operations was -75.798 + -28.158 + -72.463 + -45.785 = $-222.2 Mil.
Accounts Receivable was $61.8 Mil.
Revenue was 123.81 + 149.066 + 136.862 + 146.367 = $556.1 Mil.
Gross Profit was -26.766 + -17.778 + -18.504 + -20.486 = $-83.5 Mil.
Total Current Assets was $577.1 Mil.
Total Assets was $3,006.8 Mil.
Property, Plant and Equipment(Net PPE) was $1,762.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $105.8 Mil.
Selling, General & Admin. Expense(SGA) was $105.4 Mil.
Total Current Liabilities was $153.4 Mil.
Long-Term Debt was $1,363.9 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(44.575 / 475.613) / (61.757 / 556.105)
=0.09372116 / 0.11105277
=0.8439

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(-15.078 / 556.105) / (-44.842 / 475.613)
=-0.15021264 / -0.20938242
=0.7174

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (454.915 + 1707.97) / 2575.986) / (1 - (577.067 + 1762.874) / 3006.802)
=0.16036617 / 0.22178414
=0.7231

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=475.613 / 556.105
=0.8553

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))
=(105.764 / (105.764 + 1762.874)) / (123.661 / (123.661 + 1707.97))
=0.05659951 / 0.06751414
=0.8383

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)
=(74.491 / 475.613) / (105.367 / 556.105)
=0.15662103 / 0.18947321
=0.8266

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)
=((1559.781 + 110.054) / 2575.986) / ((1363.916 + 153.375) / 3006.802)
=0.6482314 / 0.50461953
=1.2846

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(-604.933 - -0.521 - -222.204) / 2575.986
=-0.1484

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 -3.79 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Molycorp Inc Annual Data

Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.12380.8413
GMI -0.27070.5786
AQI 0.81320.7231
SGI 1.04820.8579
DEPI 0.58760.8383
SGAI 0.89950.8102
LVGI 0.97611.2846
TATA -0.0706-0.1484
M-score -3.42-3.86

Molycorp Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.70580.55660.9590.31870.61261.12030.91371.12781.07240.8439
GMI 2.869316.922-9.1347-5.0064-1.4318-0.21830.35460.47080.80820.7174
AQI 5.6416.28626.61120.7390.7880.81320.90.92350.87520.7231
SGI 1.84521.33281.29841.35451.07391.05140.89410.81580.85280.8553
DEPI 1.38130.74520.45360.33740.47340.58760.7310.87490.88770.8383
SGAI 1.11311.40981.04190.92560.93090.83030.97080.98250.97370.8266
LVGI 1.7391.72961.9881.05271.12610.97611.0521.07381.13891.2846
TATA 0.002-0.1082-0.0997-0.1308-0.1384-0.0733-0.0863-0.0795-0.0792-0.1484
M-score 0.667.11-6.20-6.76-4.88-3.40-3.48-3.24-3.12-3.79
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