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GuruFocus has detected 2 Warning Signs with CBS Corp $CBS.
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CBS Corp (NYSE:CBS)
Beneish M-Score
-2.81 (As of Today)

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.

CBS Corp has a M-score of -2.81 suggests that the company is not a manipulator.

CBS' s Beneish M-Score Range Over the Past 10 Years
Min: -5.04   Max: -1.41
Current: -2.81

-5.04
-1.41

During the past 13 years, the highest Beneish M-Score of CBS Corp was -1.41. The lowest was -5.04. And the median was -2.54.


Definition

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 CBS Corp 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 * 0.953+0.528 * 0.9389+0.404 * 0.9956+0.892 * 0.9922+0.115 * 0.9059
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1969+4.679 * -0.0361-0.327 * 1.0836
=-2.81

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $3,478 Mil.
Revenue was 3343 + 2634 + 3396 + 3287 = $12,660 Mil.
Gross Profit was 1269 + 792 + 1499 + 1426 = $4,986 Mil.
Total Current Assets was $5,620 Mil.
Total Assets was $23,022 Mil.
Property, Plant and Equipment(Net PPE) was $1,220 Mil.
Depreciation, Depletion and Amortization(DDA) was $223 Mil.
Selling, General & Admin. Expense(SGA) was $2,228 Mil.
Total Current Liabilities was $3,424 Mil.
Long-Term Debt was $8,900 Mil.
Net Income was -252 + -113 + 478 + 423 = $536 Mil.
Non Operating Income was 1 + -7 + 2 + -4 = $-8 Mil.
Cash Flow from Operations was 719 + 379 + 55 + 223 = $1,376 Mil.
Accounts Receivable was $3,678 Mil.
Revenue was 3588 + 2695 + 3257 + 3219 = $12,759 Mil.
Gross Profit was 1316 + 675 + 1415 + 1312 = $4,718 Mil.
Total Current Assets was $5,534 Mil.
Total Assets was $23,501 Mil.
Property, Plant and Equipment(Net PPE) was $1,376 Mil.
Depreciation, Depletion and Amortization(DDA) was $224 Mil.
Selling, General & Admin. Expense(SGA) was $1,876 Mil.
Total Current Liabilities was $3,384 Mil.
Long-Term Debt was $8,226 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(3478 / 12660) / (3678 / 12759)
=0.27472354 / 0.28826711
=0.953

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(4718 / 12759) / (4986 / 12660)
=0.3697782 / 0.39383886
=0.9389

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (5620 + 1220) / 23022) / (1 - (5534 + 1376) / 23501)
=0.70289289 / 0.70596996
=0.9956

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=12660 / 12759
=0.9922

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))
=(224 / (224 + 1376)) / (223 / (223 + 1220))
=0.14 / 0.15453915
=0.9059

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)
=(2228 / 12660) / (1876 / 12759)
=0.17598736 / 0.14703347
=1.1969

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)
=((8900 + 3424) / 23022) / ((8226 + 3384) / 23501)
=0.53531405 / 0.49402153
=1.0836

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(536 - -8 - 1376) / 23022
=-0.0361

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.

CBS Corp has a M-score of -2.81 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

CBS Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.9651.03591.13051.08240.93821.08130.94371.19650.9640.945
GMI 1.00871.07431.14580.90120.87170.97381.03211.08841.0270.9493
AQI 1.04070.89430.98361.01161.00721.00021.06170.95930.99220.9904
SGI 0.98270.99130.93291.03471.01270.94011.09240.89391.01211.0391
DEPI 1.01180.89850.88741.08110.90661.4540.7171.1150.94061.029
SGAI 0.97440.98711.02250.95781.04030.99990.95440.8660.9831.146
LVGI 1.08051.53230.96380.91260.98670.98571.03381.14181.12951.049
TATA -0.0224-0.5136-0.0252-0.0359-0.0165-0.0082-00.08630.0019-0.017
M-score -2.63-5.04-2.47-2.54-2.68-2.45-2.44-1.97-2.53-2.64

CBS Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.22021.1341.13661.11340.9641.06361.010.94030.96410.953
GMI 1.08761.11761.13711.1121.0271.02950.99140.99040.96320.9389
AQI 0.95930.99970.97271.00560.99220.97791.00061.00090.99040.9956
SGI 0.87660.90130.91560.90321.01211.02491.02781.04821.01850.9922
DEPI 1.1150.67151.1151.13890.94061.07511.03911.03791.0290.9059
SGAI 0.86920.86680.87410.89520.9830.92820.93040.94241.1121.1969
LVGI 1.14181.02791.35311.16331.12951.08951.0371.02421.0491.0836
TATA 0.08630.08850.0708-0.00010.0019-0.0216-0.008-0.0182-0.017-0.0361
M-score -1.96-1.99-2.12-2.42-2.53-2.50-2.48-2.58-2.63-2.81
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