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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 2.68. The lowest was -5.32. 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 * 1.0142||+||0.528 * 1.0108||+||0.404 * 1.2155||+||0.892 * 1.0482||+||0.115 * 0.9665|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0017||+||4.679 * -0.0407||-||0.327 * 0.9142|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $552 Mil.|
Revenue was 1322.6 + 1317.6 + 1210.9 + 1207.7 = $5,059 Mil.
Gross Profit was 880.2 + 865.8 + 795.3 + 795.9 = $3,337 Mil.
Total Current Assets was $851 Mil.
Total Assets was $2,047 Mil.
Property, Plant and Equipment(Net PPE) was $1,016 Mil.
Depreciation, Depletion and Amortization(DDA) was $165 Mil.
Selling, General & Admin. Expense(SGA) was $2,905 Mil.
Total Current Liabilities was $656 Mil.
Long-Term Debt was $1,080 Mil.
Net Income was 1.2 + -4.9 + -70.2 + 0.4 = $-74 Mil.
Non Operating Income was 2.7 + -1.1 + 16.3 + 3 = $21 Mil.
Cash Flow from Operations was 29.3 + 0.6 + -56.2 + 15.1 = $-11 Mil.
|Accounts Receivable was $519 Mil.
Revenue was 1252.7 + 1242.5 + 1162.5 + 1168.6 = $4,826 Mil.
Gross Profit was 829.3 + 831 + 779.8 + 778 = $3,218 Mil.
Total Current Assets was $859 Mil.
Total Assets was $2,134 Mil.
Property, Plant and Equipment(Net PPE) was $1,121 Mil.
Depreciation, Depletion and Amortization(DDA) was $175 Mil.
Selling, General & Admin. Expense(SGA) was $2,767 Mil.
Total Current Liabilities was $1,011 Mil.
Long-Term Debt was $968 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)|
|=||(551.7 / 5058.8)||/||(519 / 4826.3)|
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)|
|=||(865.8 / 4826.3)||/||(880.2 / 5058.8)|
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 - (851.4 + 1015.9) / 2046.6)||/||(1 - (859.2 + 1120.9) / 2133.9)|
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))|
|=||(174.8 / (174.8 + 1120.9))||/||(164.8 / (164.8 + 1015.9))|
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)|
|=||(2905.1 / 5058.8)||/||(2767 / 4826.3)|
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)|
|=||((1079.7 + 655.5) / 2046.6)||/||((968.3 + 1010.8) / 2133.9)|
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|
|=||(-73.5 - 20.9||-||-11.2)||/||2046.6|
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 -2.50 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