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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 YRC Worldwide Inc was 1.26. The lowest was -4.71. And the median was -2.83.
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 YRC Worldwide 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 * 0.9799||+||0.528 * 1.0012||+||0.404 * 1.4036||+||0.892 * 1.0418||+||0.115 * 0.9661|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9935||+||4.679 * -0.0589||-||0.327 * 0.9023|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $471 Mil.|
Revenue was 1217.7 + 1322.6 + 1317.6 + 1210.9 = $5,069 Mil.
Gross Profit was 825.9 + 880.2 + 865.8 + 795.3 = $3,367 Mil.
Total Current Assets was $752 Mil.
Total Assets was $1,985 Mil.
Property, Plant and Equipment(Net PPE) was $994 Mil.
Depreciation, Depletion and Amortization(DDA) was $164 Mil.
Selling, General & Admin. Expense(SGA) was $2,901 Mil.
Total Current Liabilities was $604 Mil.
Long-Term Debt was $1,079 Mil.
Net Income was 6.2 + 1.2 + -4.9 + -70.2 = $-68 Mil.
Non Operating Income was 2.8 + 2.7 + -1.1 + 16.3 = $21 Mil.
Cash Flow from Operations was 54.8 + 29.3 + 0.6 + -56.2 = $29 Mil.
|Accounts Receivable was $461 Mil.
Revenue was 1207.7 + 1252.7 + 1242.5 + 1162.5 = $4,865 Mil.
Gross Profit was 795.9 + 829.3 + 831 + 779.8 = $3,236 Mil.
Total Current Assets was $798 Mil.
Total Assets was $2,065 Mil.
Property, Plant and Equipment(Net PPE) was $1,090 Mil.
Depreciation, Depletion and Amortization(DDA) was $172 Mil.
Selling, General & Admin. Expense(SGA) was $2,803 Mil.
Total Current Liabilities was $585 Mil.
Long-Term Debt was $1,355 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)|
|=||(470.5 / 5068.8)||/||(460.9 / 4865.4)|
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)|
|=||(880.2 / 4865.4)||/||(825.9 / 5068.8)|
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 - (751.7 + 994.2) / 1985)||/||(1 - (797.9 + 1089.8) / 2064.9)|
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))|
|=||(172.3 / (172.3 + 1089.8))||/||(163.6 / (163.6 + 994.2))|
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)|
|=||(2901.2 / 5068.8)||/||(2803.1 / 4865.4)|
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)|
|=||((1078.8 + 603.5) / 1985)||/||((1354.8 + 584.6) / 2064.9)|
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|
|=||(-67.7 - 20.7||-||28.5)||/||1985|
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.
YRC Worldwide Inc has a M-score of -2.54 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
YRC Worldwide Inc Annual Data
YRC Worldwide Inc Quarterly Data