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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 Viacom Inc was -1.95. The lowest was -2.73. And the median was -2.58.
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 Viacom 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 * 1.0741||+||0.528 * 0.9484||+||0.404 * 0.9951||+||0.892 * 0.9398||+||0.115 * 1.0031|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0079||+||4.679 * 0.0109||-||0.327 * 0.9174|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $2,784 Mil.|
Revenue was 3001 + 3154 + 3788 + 3058 = $13,001 Mil.
Gross Profit was 1347 + 1561 + 1851 + 1806 = $6,565 Mil.
Total Current Assets was $4,734 Mil.
Total Assets was $22,565 Mil.
Property, Plant and Equipment(Net PPE) was $879 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,671 Mil.
Selling, General & Admin. Expense(SGA) was $2,780 Mil.
Total Current Liabilities was $4,470 Mil.
Long-Term Debt was $11,496 Mil.
Net Income was 303 + 449 + 884 + 591 = $2,227 Mil.
Non Operating Income was 29 + 33 + -25 + 28 = $65 Mil.
Cash Flow from Operations was 410 + -126 + 1233 + 400 = $1,917 Mil.
|Accounts Receivable was $2,758 Mil.
Revenue was 3078 + 3344 + 3991 + 3421 = $13,834 Mil.
Gross Profit was 1022 + 1721 + 2026 + 1856 = $6,625 Mil.
Total Current Assets was $4,383 Mil.
Total Assets was $21,757 Mil.
Property, Plant and Equipment(Net PPE) was $949 Mil.
Depreciation, Depletion and Amortization(DDA) was $5,143 Mil.
Selling, General & Admin. Expense(SGA) was $2,935 Mil.
Total Current Liabilities was $3,567 Mil.
Long-Term Debt was $13,213 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)|
|=||(2784 / 13001)||/||(2758 / 13834)|
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)|
|=||(6625 / 13834)||/||(6565 / 13001)|
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 - (4734 + 879) / 22565)||/||(1 - (4383 + 949) / 21757)|
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))|
|=||(5143 / (5143 + 949))||/||(4671 / (4671 + 879))|
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)|
|=||(2780 / 13001)||/||(2935 / 13834)|
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)|
|=||((11496 + 4470) / 22565)||/||((13213 + 3567) / 21757)|
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|
|=||(2227 - 65||-||1917)||/||22565|
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.
Viacom Inc has a M-score of -2.42 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
Viacom Inc Annual Data
Viacom Inc Quarterly Data