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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 -4.28. And the median was -2.53.
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 * 0.8861||+||0.528 * 1.1589||+||0.404 * 1.0351||+||0.892 * 1.1029||+||0.115 * 0.931|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9067||+||4.679 * -0.075||-||0.327 * 1.0373|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $43 Mil.|
Revenue was 302 + 406 + 428 + 375 = $1,511 Mil.
Gross Profit was 75 + 91 + 119 + 109 = $394 Mil.
Total Current Assets was $263 Mil.
Total Assets was $5,080 Mil.
Property, Plant and Equipment(Net PPE) was $4,349 Mil.
Depreciation, Depletion and Amortization(DDA) was $137 Mil.
Selling, General & Admin. Expense(SGA) was $121 Mil.
Total Current Liabilities was $686 Mil.
Long-Term Debt was $2,759 Mil.
Net Income was 21 + 42 + 68 + 61 = $192 Mil.
Non Operating Income was 19 + 22 + 22 + 15 = $78 Mil.
Cash Flow from Operations was 76 + 151 + 135 + 133 = $495 Mil.
|Accounts Receivable was $44 Mil.
Revenue was 356 + 317 + 331 + 366 = $1,370 Mil.
Gross Profit was 109 + 85 + 98 + 122 = $414 Mil.
Total Current Assets was $283 Mil.
Total Assets was $5,337 Mil.
Property, Plant and Equipment(Net PPE) was $4,579 Mil.
Depreciation, Depletion and Amortization(DDA) was $134 Mil.
Selling, General & Admin. Expense(SGA) was $121 Mil.
Total Current Liabilities was $292 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)|
|=||(43 / 1511)||/||(44 / 1370)|
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)|
|=||(91 / 1370)||/||(75 / 1511)|
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 - (263 + 4349) / 5080)||/||(1 - (283 + 4579) / 5337)|
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))|
|=||(134 / (134 + 4579))||/||(137 / (137 + 4349))|
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)|
|=||(121 / 1511)||/||(121 / 1370)|
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 + 686) / 5080)||/||((3197 + 292) / 5337)|
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|
|=||(192 - 78||-||495)||/||5080|
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 -2.75 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