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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.
Molycorp Inc has a M-score of -3.21 suggests that the company is not a manipulator.
During the past 5 years, the highest Beneish M-Score of Molycorp Inc was 6.28. The lowest was -11.27. And the median was -3.50.
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 * 1.0698||+||0.528 * 0.6282||+||0.404 * 0.8752||+||0.892 * 0.8549||+||0.115 * 0.885|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9487||+||4.679 * -0.0792||-||0.327 * 1.1389|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $53.2 Mil.|
Revenue was 123.937 + 116.907 + 118.526 + 123.81 = $483.2 Mil.
Gross Profit was -15.078 + -16.571 + -23.094 + -26.766 = $-81.5 Mil.
Total Current Assets was $560.8 Mil.
Total Assets was $2,961.3 Mil.
Property, Plant and Equipment(Net PPE) was $1,736.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $108.1 Mil.
Selling, General & Admin. Expense(SGA) was $90.8 Mil.
Total Current Liabilities was $144.7 Mil.
Long-Term Debt was $1,582.8 Mil.
Net Income was -105.179 + -83.899 + -86.061 + -194.311 = $-469.5 Mil.
Non Operating Income was -14.611 + 0.296 + 0.474 + -10.375 = $-24.2 Mil.
Cash Flow from Operations was -28.158 + -72.463 + -45.785 + -64.338 = $-210.7 Mil.
|Accounts Receivable was $58.2 Mil.
Revenue was 149.066 + 136.112 + 146.367 + 133.611 = $565.2 Mil.
Gross Profit was -17.778 + -18.036 + -4.536 + -19.544 = $-59.9 Mil.
Total Current Assets was $473.1 Mil.
Total Assets was $3,027.3 Mil.
Property, Plant and Equipment(Net PPE) was $1,779.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $97.3 Mil.
Selling, General & Admin. Expense(SGA) was $111.9 Mil.
Total Current Liabilities was $194.4 Mil.
Long-Term Debt was $1,356.3 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)|
|=||(53.229 / 483.18)||/||(58.2 / 565.156)|
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)|
|=||(-16.571 / 565.156)||/||(-15.078 / 483.18)|
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 - (560.817 + 1736.872) / 2961.259)||/||(1 - (473.069 + 1779.084) / 3027.276)|
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))|
|=||(97.252 / (97.252 + 1779.084))||/||(108.055 / (108.055 + 1736.872))|
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)|
|=||(90.754 / 483.18)||/||(111.895 / 565.156)|
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)|
|=||((1582.802 + 144.69) / 2961.259)||/||((1356.256 + 194.397) / 3027.276)|
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|
|=||(-469.45 - -24.216||-||-210.744)||/||2961.259|
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 -3.21 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