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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 1.48. The lowest was -4.52. And the median was -2.78.
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 * 1.08||+||0.528 * 0.9861||+||0.404 * 0.9158||+||0.892 * 0.9721||+||0.115 * 0.9053|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0125||+||4.679 * -0.0482||-||0.327 * 1.0108|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $449 Mil.|
Revenue was 1148.3 + 1221.3 + 1207.6 + 1120.3 = $4,698 Mil.
Gross Profit was 800.3 + 857.6 + 872.3 + 814.6 = $3,345 Mil.
Total Current Assets was $781 Mil.
Total Assets was $1,770 Mil.
Property, Plant and Equipment(Net PPE) was $684 Mil.
Depreciation, Depletion and Amortization(DDA) was $160 Mil.
Selling, General & Admin. Expense(SGA) was $2,823 Mil.
Total Current Liabilities was $562 Mil.
Long-Term Debt was $980 Mil.
Net Income was -7.5 + 13.9 + 27.1 + -12 = $22 Mil.
Non Operating Income was 2.8 + 1.2 + 0.8 + -1.1 = $4 Mil.
Cash Flow from Operations was 17.1 + 38.5 + 58.6 + -11.1 = $103 Mil.
|Accounts Receivable was $427 Mil.
Revenue was 1142.7 + 1244.9 + 1258.4 + 1186.4 = $4,832 Mil.
Gross Profit was 812.3 + 878.2 + 877.6 + 824.8 = $3,393 Mil.
Total Current Assets was $734 Mil.
Total Assets was $1,879 Mil.
Property, Plant and Equipment(Net PPE) was $791 Mil.
Depreciation, Depletion and Amortization(DDA) was $164 Mil.
Selling, General & Admin. Expense(SGA) was $2,868 Mil.
Total Current Liabilities was $574 Mil.
Long-Term Debt was $1,047 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)|
|=||(448.7 / 4697.5)||/||(427.4 / 4832.4)|
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)|
|=||(3392.9 / 4832.4)||/||(3344.8 / 4697.5)|
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 - (780.8 + 683.8) / 1770)||/||(1 - (734.4 + 790.9) / 1879.4)|
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))|
|=||(163.7 / (163.7 + 790.9))||/||(159.8 / (159.8 + 683.8))|
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)|
|=||(2823.1 / 4697.5)||/||(2868.2 / 4832.4)|
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)|
|=||((980.3 + 561.9) / 1770)||/||((1046.5 + 573.5) / 1879.4)|
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|
|=||(21.5 - 3.7||-||103.1)||/||1770|
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 -2.71 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