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Molycorp Inc (NYSE:MCP)
Beneish M-Score
-3.21 (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 -3.21 suggests that the company is not a manipulator.

MCP' s 10-Year Beneish M-Score Range
Min: -11.27   Max: 6.28
Current: -3.21

-11.27
6.28

During the past 5 years, the highest Beneish M-Score of Molycorp Inc was 6.28. The lowest was -11.27. And the median was -3.50.


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 * 1.0698+0.528 * 0.6282+0.404 * 0.8752+0.892 * 0.8549+0.115 * 0.885
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9487+4.679 * -0.0792-0.327 * 1.1389
=-3.21

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $53.2 Mil.
Revenue was 123.937 + 116.907 + 118.526 + 123.81 = $483.2 Mil.
Gross Profit was -15.078 + -16.571 + -23.094 + -26.766 = $-81.5 Mil.
Total Current Assets was $560.8 Mil.
Total Assets was $2,961.3 Mil.
Property, Plant and Equipment(Net PPE) was $1,736.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $108.1 Mil.
Selling, General & Admin. Expense(SGA) was $90.8 Mil.
Total Current Liabilities was $144.7 Mil.
Long-Term Debt was $1,582.8 Mil.
Net Income was -105.179 + -83.899 + -86.061 + -194.311 = $-469.5 Mil.
Non Operating Income was -14.611 + 0.296 + 0.474 + -10.375 = $-24.2 Mil.
Cash Flow from Operations was -28.158 + -72.463 + -45.785 + -64.338 = $-210.7 Mil.
Accounts Receivable was $58.2 Mil.
Revenue was 149.066 + 136.112 + 146.367 + 133.611 = $565.2 Mil.
Gross Profit was -17.778 + -18.036 + -4.536 + -19.544 = $-59.9 Mil.
Total Current Assets was $473.1 Mil.
Total Assets was $3,027.3 Mil.
Property, Plant and Equipment(Net PPE) was $1,779.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $97.3 Mil.
Selling, General & Admin. Expense(SGA) was $111.9 Mil.
Total Current Liabilities was $194.4 Mil.
Long-Term Debt was $1,356.3 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)
=(53.229 / 483.18) / (58.2 / 565.156)
=0.11016391 / 0.10298042
=1.0698

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)
=(-16.571 / 565.156) / (-15.078 / 483.18)
=-0.10597782 / -0.16869283
=0.6282

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 - (560.817 + 1736.872) / 2961.259) / (1 - (473.069 + 1779.084) / 3027.276)
=0.22408374 / 0.25604636
=0.8752

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
=483.18 / 565.156
=0.8549

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))
=(97.252 / (97.252 + 1779.084)) / (108.055 / (108.055 + 1736.872))
=0.0518308 / 0.05856871
=0.885

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)
=(90.754 / 483.18) / (111.895 / 565.156)
=0.18782648 / 0.19798958
=0.9487

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)
=((1582.802 + 144.69) / 2961.259) / ((1356.256 + 194.397) / 3027.276)
=0.58336404 / 0.51222716
=1.1389

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
=(-469.45 - -24.216 - -210.744) / 2961.259
=-0.0792

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 -3.21 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

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.92950.70570.55770.96070.31960.61361.11960.91341.12461.0698
GMI 1.20652.636815.511-18.5591-7.8894-1.9438-0.29430.17530.29880.6282
AQI 8.74375.6416.2746.56690.7390.7880.81480.9060.92350.8752
SGI 2.94661.84561.33021.29611.35061.07211.05210.89450.81810.8549
DEPI 2.01671.39030.79830.47210.34450.4920.58420.72890.8730.885
SGAI 0.6211.19031.60361.35091.1171.06620.90070.95540.96030.9487
LVGI 1.7771.7391.73091.98191.05271.12610.97541.05521.07381.1389
TATA 0.0310.003-0.1188-0.1065-0.1381-0.1459-0.0703-0.0861-0.0795-0.0792
M-score 2.500.536.28-11.27-8.35-5.20-3.43-3.57-3.33-3.21
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