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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 -6.91. And the median was -3.54.
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|
|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
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)|
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)|
|=||(-44.842 / 528.264)||/||(-24.73 / 463.511)|
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 - (398.119 + 1691.051) / 2494.784)||/||(1 - (489.125 + 1756.09) / 2903.636)|
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))|
|=||(106.58 / (106.58 + 1756.09))||/||(131.166 / (131.166 + 1691.051))|
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)|
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)|
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|
|=||(-621.206 - 1.128||-||-249.304)||/||2494.784|
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.
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