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Molycorp Inc (NYSE:MCP)
Beneish M-Score
-3.59 (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 -3.59 suggests that the company is not a manipulator.

MCP' s 10-Year Beneish M-Score Range
Min: -6.91   Max: 6.28
Current: -3.59

-6.91
6.28

During the past 6 years, the highest Beneish M-Score of Molycorp Inc was 6.28. The lowest was -6.91. And the median was -3.54.


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 * 1.0537+0.528 * 0.7467+0.404 * 0.717+0.892 * 0.8774+0.115 * 0.7949
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8989+4.679 * -0.1495-0.327 * 1.2971
=-3.59

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $47.7 Mil.
Revenue was 106.424 + 116.243 + 123.937 + 116.907 = $463.5 Mil.
Gross Profit was -24.73 + -44.842 + -15.078 + -16.571 = $-101.2 Mil.
Total Current Assets was $398.1 Mil.
Total Assets was $2,494.8 Mil.
Property, Plant and Equipment(Net PPE) was $1,691.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $131.2 Mil.
Selling, General & Admin. Expense(SGA) was $78.0 Mil.
Total Current Liabilities was $113.6 Mil.
Long-Term Debt was $1,570.8 Mil.
Net Income was -102.334 + -329.794 + -105.179 + -83.899 = $-621.2 Mil.
Non Operating Income was 2.123 + 13.32 + -14.611 + 0.296 = $1.1 Mil.
Cash Flow from Operations was -72.885 + -75.798 + -28.158 + -72.463 = $-249.3 Mil.
Accounts Receivable was $51.6 Mil.
Revenue was 118.526 + 123.81 + 149.066 + 136.862 = $528.3 Mil.
Gross Profit was -23.094 + -26.766 + -17.778 + -18.504 = $-86.1 Mil.
Total Current Assets was $489.1 Mil.
Total Assets was $2,903.6 Mil.
Property, Plant and Equipment(Net PPE) was $1,756.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $106.6 Mil.
Selling, General & Admin. Expense(SGA) was $98.9 Mil.
Total Current Liabilities was $139.6 Mil.
Long-Term Debt was $1,371.9 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)
=(47.697 / 463.511) / (51.591 / 528.264)
=0.10290371 / 0.0976614
=1.0537

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)
=(-44.842 / 528.264) / (-24.73 / 463.511)
=-0.16306619 / -0.21837885
=0.7467

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 - (398.119 + 1691.051) / 2494.784) / (1 - (489.125 + 1756.09) / 2903.636)
=0.16258482 / 0.22675742
=0.717

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
=463.511 / 528.264
=0.8774

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))
=(106.58 / (106.58 + 1756.09)) / (131.166 / (131.166 + 1691.051))
=0.05721894 / 0.07198155
=0.7949

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)
=(77.992 / 463.511) / (98.885 / 528.264)
=0.16826354 / 0.1871886
=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)
=((1570.801 + 113.648) / 2494.784) / ((1371.924 + 139.563) / 2903.636)
=0.67518831 / 0.52054975
=1.2971

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
=(-621.206 - 1.128 - -249.304) / 2494.784
=-0.1495

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 -3.59 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 1.12120.8413
GMI -0.29440.5786
AQI 0.81480.7231
SGI 1.05060.8579
DEPI 0.58420.8383
SGAI 0.89930.8102
LVGI 0.97541.2846
TATA -0.0706-0.1484
M-score -3.43-3.86

Molycorp Inc Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 0.55770.96070.31930.61281.11810.91211.12591.07120.84391.0537
GMI 15.511-9.5168-5.1495-1.5276-0.23680.34040.45770.79940.71740.7467
AQI 6.2746.61120.7390.7880.81480.90.92350.87520.72310.717
SGI 1.33021.29611.35231.07351.05350.89570.81720.85380.85530.8774
DEPI 0.79830.47210.34450.4920.58420.72890.8730.8850.83830.7949
SGAI 1.60361.32671.09381.04190.88150.97090.98260.97350.82660.8989
LVGI 1.73091.9881.05271.12610.97541.0521.07381.13891.28461.2971
TATA -0.1188-0.1095-0.141-0.1488-0.0733-0.0863-0.0795-0.0792-0.1484-0.1495
M-score 6.28-6.49-6.91-4.99-3.41-3.49-3.25-3.13-3.79-3.59
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