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Molycorp Inc (NYSE:MCP)
Beneish M-Score
-3.33 (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 -3.33 suggests that the company is not a manipulator.

MCP' s 10-Year Beneish M-Score Range
Min: -11.24   Max: 6.34
Current: -3.33

-11.24
6.34

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.


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 * 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
=-3.33

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

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

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)
=(47.031 / 508.309) / (51.117 / 621.295)
=0.09252443 / 0.08227493
=1.1246

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)
=(-23.094 / 621.295) / (-16.571 / 508.309)
=-0.0494934 / -0.16566498
=0.2988

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 - (419.292 + 1743.494) / 2831.246) / (1 - (584.662 + 1713.258) / 3087.182)
=0.236101 / 0.25565775
=0.9235

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
=508.309 / 621.295
=0.8181

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))
=0.05049834 / 0.05784785
=0.873

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)
=0.18394717 / 0.19117488
=0.9622

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)
=0.53240587 / 0.495802
=1.0738

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
=(-434.2 - -10.496 - -198.558) / 2831.246
=-0.0795

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.


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

Dec09Dec10Dec11Dec12Dec13
DSRI 1.1212
GMI -0.2944
AQI 0.8148
SGI 1.0506
DEPI 0.5842
SGAI 0.8993
LVGI 0.9754
TATA -0.0706
M-score -3.43

Molycorp Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.92950.70570.55770.96070.31960.61361.11960.91341.1246
GMI 1.20652.636815.511-18.5591-7.8894-1.9438-0.29430.17530.2988
AQI 8.74375.6416.2746.56690.7390.7880.81480.9060.9235
SGI 2.94661.84561.33021.29611.35061.07211.05210.89450.8181
DEPI 1.36461.09331.30090.74770.50920.62570.58420.72890.873
SGAI 0.6211.19031.60361.35091.1171.06550.90220.95720.9622
LVGI 1.7771.7391.73091.98191.05271.12610.97541.05521.0738
TATA 0.0219-0.0055-0.1188-0.1065-0.1381-0.1459-0.0703-0.0861-0.0795
M-score 2.380.456.34-11.24-8.33-5.19-3.43-3.57-3.33
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