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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 13 years, the highest Beneish M-Score of Plum Creek Timber Co Inc was 24.10. The lowest was -2.91. And the median was -2.46.
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 Plum Creek Timber Co 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 * 1.1896||+||0.528 * 1.0963||+||0.404 * 1.0814||+||0.892 * 1.1015||+||0.115 * 0.8332|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8488||+||4.679 * -0.0596||-||0.327 * 0.9909|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $38 Mil.|
Revenue was 428 + 375 + 356 + 317 = $1,476 Mil.
Gross Profit was 119 + 109 + 109 + 85 = $422 Mil.
Total Current Assets was $310 Mil.
Total Assets was $5,187 Mil.
Property, Plant and Equipment(Net PPE) was $4,418 Mil.
Depreciation, Depletion and Amortization(DDA) was $138 Mil.
Selling, General & Admin. Expense(SGA) was $115 Mil.
Total Current Liabilities was $657 Mil.
Long-Term Debt was $2,759 Mil.
Net Income was 68 + 61 + 55 + 30 = $214 Mil.
Non Operating Income was 22 + 15 + 15 + 14 = $66 Mil.
Cash Flow from Operations was 135 + 133 + 132 + 57 = $457 Mil.
|Accounts Receivable was $29 Mil.
Revenue was 331 + 366 + 303 + 340 = $1,340 Mil.
Gross Profit was 98 + 122 + 90 + 110 = $420 Mil.
Total Current Assets was $633 Mil.
Total Assets was $5,695 Mil.
Property, Plant and Equipment(Net PPE) was $4,596 Mil.
Depreciation, Depletion and Amortization(DDA) was $119 Mil.
Selling, General & Admin. Expense(SGA) was $123 Mil.
Total Current Liabilities was $588 Mil.
Long-Term Debt was $3,197 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)|
|=||(38 / 1476)||/||(29 / 1340)|
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)|
|=||(109 / 1340)||/||(119 / 1476)|
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 - (310 + 4418) / 5187)||/||(1 - (633 + 4596) / 5695)|
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))|
|=||(119 / (119 + 4596))||/||(138 / (138 + 4418))|
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)|
|=||(115 / 1476)||/||(123 / 1340)|
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)|
|=||((2759 + 657) / 5187)||/||((3197 + 588) / 5695)|
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|
|=||(214 - 66||-||457)||/||5187|
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.
Plum Creek Timber Co Inc has a M-score of -2.40 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
Plum Creek Timber Co Inc Annual Data
Plum Creek Timber Co Inc Quarterly Data