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Molycorp, Inc. (NYSE:MCP)
Beneish M-Score
-3.76 (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 -3.76 suggests that the company is not a manipulator.

MCP' s 10-Year Beneish M-Score Range
Min: -5.63   Max: 6.43
Current: -3.76

-5.63
6.43

During the past 5 years, the highest Beneish M-Score of Molycorp, Inc. was 6.43. The lowest was -5.63. And the median was -3.76.


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 * 0.7659+0.528 * -0.2927+0.404 * 0.8148+0.892 * 1.0535+0.115 * 0.5842
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8989+4.679 * -0.0706-0.327 * 0.9754
=-3.76

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $62.5 Mil.
Revenue was 123.81 + 149.066 + 136.862 + 146.367 = $556.1 Mil.
Gross Profit was -26.766 + -17.778 + -18.504 + -4.536 = $-67.6 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 $107.4 Mil.
Total Current Liabilities was $153.4 Mil.
Long-Term Debt was $1,363.9 Mil.
Net Income was -194.311 + -69.929 + -71.175 + -38.971 = $-374.4 Mil.
Non Operating Income was -10.375 + -0.891 + 3.494 + -0.129 = $-7.9 Mil.
Cash Flow from Operations was -64.338 + -15.972 + -37.413 + -36.628 = $-154.4 Mil.
Accounts Receivable was $77.5 Mil.
Revenue was 133.611 + 205.205 + 104.577 + 84.47 = $527.9 Mil.
Gross Profit was -19.544 + 11.366 + -4.073 + 31.027 = $18.8 Mil.
Total Current Assets was $633.7 Mil.
Total Assets was $2,992.5 Mil.
Property, Plant and Equipment(Net PPE) was $1,544.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $52.8 Mil.
Selling, General & Admin. Expense(SGA) was $113.5 Mil.
Total Current Liabilities was $359.4 Mil.
Long-Term Debt was $1,188.8 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)
=(62.544 / 556.105) / (77.517 / 527.863)
=0.11246797 / 0.1468506
=0.7659

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)
=(-17.778 / 527.863) / (-26.766 / 556.105)
=0.03556984 / -0.12153101
=-0.2927

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 - (577.067 + 1762.874) / 3006.802) / (1 - (633.678 + 1544.304) / 2992.535)
=0.22178414 / 0.27219498
=0.8148

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
=556.105 / 527.863
=1.0535

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))
=(52.808 / (52.808 + 1544.304)) / (105.764 / (105.764 + 1762.874))
=0.03306468 / 0.05659951
=0.5842

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)
=(107.443 / 556.105) / (113.456 / 527.863)
=0.19320632 / 0.21493456
=0.8989

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)
=((1363.916 + 153.375) / 3006.802) / ((1188.832 + 359.417) / 2992.535)
=0.50461953 / 0.51737039
=0.9754

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
=(-374.386 - -7.901 - -154.351) / 3006.802
=-0.0706

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 -3.76 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 0.768
GMI -0.2944
AQI 0.8148
SGI 1.0506
DEPI 0.5842
SGAI 0.8993
LVGI 0.9754
TATA -0.0706
M-score -3.76

Molycorp, Inc. Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 0.92951.01620.71771.26980.4460.57390.7659
GMI 1.20652.636815.511-18.5591-7.7805-1.9313-0.2927
AQI 8.74375.6416.2746.56690.7390.7880.8148
SGI 2.94661.84561.33021.29611.35231.07351.0535
DEPI 2.01671.39030.79830.47210.34450.4920.5842
SGAI 0.6211.19031.60361.35091.11331.06170.8989
LVGI 1.7771.7391.73091.98191.05271.12610.9754
TATA 0.0310.003-0.1188-0.1065-0.1384-0.1461-0.0706
M-score 2.500.816.43-10.99-8.18-5.23-3.76
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