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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.
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.
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|
* 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
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)|
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)|
|=||(-15.078 / 556.105)||/||(-44.842 / 475.613)|
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 - (454.915 + 1707.97) / 2575.986)||/||(1 - (577.067 + 1762.874) / 3006.802)|
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))|
|=||(105.764 / (105.764 + 1762.874))||/||(123.661 / (123.661 + 1707.97))|
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)|
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)|
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|
|=||(-604.933 - -0.521||-||-222.204)||/||2575.986|
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.
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