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Molycorp Inc (NYSE:MCP)
Beneish M-Score
-3.78 (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 -3.78 suggests that the company is not a manipulator.

MCP' s 10-Year Beneish M-Score Range
Min: -10.99   Max: 6.43
Current: -3.78

-10.99
6.43

During the past 5 years, the highest Beneish M-Score of Molycorp Inc was 6.43. The lowest was -10.99. And the median was -4.19.


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 * 0.6901+0.528 * 0.1746+0.404 * 0.906+0.892 * 0.8957+0.115 * 0.7289
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9534+4.679 * -0.0863-0.327 * 1.0552
=-3.78

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
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.
Net Income was -86.061 + -194.311 + -69.929 + -71.175 = $-421.5 Mil.
Non Operating Income was 0.474 + -10.375 + -0.891 + 3.494 = $-7.3 Mil.
Cash Flow from Operations was -45.785 + -64.338 + -15.972 + -37.413 = $-163.5 Mil.
Accounts Receivable was $83.5 Mil.
Revenue was 146.367 + 133.611 + 205.205 + 104.577 = $589.8 Mil.
Gross Profit was -4.536 + -19.544 + 11.366 + -4.073 = $-16.8 Mil.
Total Current Assets was $771.2 Mil.
Total Assets was $3,223.3 Mil.
Property, Plant and Equipment(Net PPE) was $1,645.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $71.6 Mil.
Selling, General & Admin. Expense(SGA) was $115.8 Mil.
Total Current Liabilities was $251.3 Mil.
Long-Term Debt was $1,338.8 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)
=(51.591 / 528.264) / (83.465 / 589.76)
=0.0976614 / 0.14152367
=0.6901

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)
=(-26.766 / 589.76) / (-23.094 / 528.264)
=-0.02846412 / -0.16306619
=0.1746

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 - (489.125 + 1756.09) / 2903.636) / (1 - (771.211 + 1645.374) / 3223.298)
=0.22675742 / 0.25027565
=0.906

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
=528.264 / 589.76
=0.8957

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))
=(71.609 / (71.609 + 1645.374)) / (106.58 / (106.58 + 1756.09))
=0.0417063 / 0.05721894
=0.7289

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)
=(98.885 / 528.264) / (115.787 / 589.76)
=0.1871886 / 0.19632902
=0.9534

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)
=((1371.924 + 139.563) / 2903.636) / ((1338.793 + 251.287) / 3223.298)
=0.52054975 / 0.49330841
=1.0552

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
=(-421.476 - -7.298 - -163.508) / 2903.636
=-0.0863

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 -3.78 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

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.92951.01620.71771.26980.4460.57390.76590.6901
GMI 1.20652.636815.511-18.5591-7.7805-1.9313-0.29270.1746
AQI 8.74375.6416.2746.56690.7390.7880.81480.906
SGI 2.94661.84561.33021.29611.35231.07351.05350.8957
DEPI 2.01671.39030.79830.47210.34450.4920.58420.7289
SGAI 0.6211.19031.60361.35091.11331.06170.89890.9534
LVGI 1.7771.7391.73091.98191.05271.12610.97541.0552
TATA 0.0310.003-0.1188-0.1065-0.1384-0.1461-0.0706-0.0863
M-score 2.500.816.43-10.99-8.18-5.23-3.76-3.78
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