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GuruFocus has detected 8 Warning Signs with Charter Communications Inc $CHTR.
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Charter Communications Inc (NAS:CHTR)
Beneish M-Score
0.25 (As of Today)

Warning Sign:

Beneish M-Score 0.25 higher than -2.22, which implies that it might have manipulated its financial results.

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.

Charter Communications Inc has a M-score of 0.25 signals that the company is a manipulator.

CHTR' s Beneish M-Score Range Over the Past 10 Years
Min: -6.83   Max: 12.08
Current: 0.25

-6.83
12.08

During the past 13 years, the highest Beneish M-Score of Charter Communications Inc was 12.08. The lowest was -6.83. And the median was -2.99.


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 Charter Communications 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 * 1.4033+0.528 * 0.9696+0.404 * 0.9926+0.892 * 3.6925+0.115 * 0.9607
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8789+4.679 * -0.044-0.327 * 0.4886
=0.25

* 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 $1,311 Mil.
Revenue was 10164 + 10275 + 10037 + 6161 = $36,637 Mil.
Gross Profit was 5247 + 5514 + 5300 + 3225 = $19,286 Mil.
Total Current Assets was $4,666 Mil.
Total Assets was $149,444 Mil.
Property, Plant and Equipment(Net PPE) was $32,699 Mil.
Depreciation, Depletion and Amortization(DDA) was $8,918 Mil.
Selling, General & Admin. Expense(SGA) was $2,301 Mil.
Total Current Liabilities was $9,520 Mil.
Long-Term Debt was $60,837 Mil.
Net Income was 155 + 454 + 189 + 3067 = $3,865 Mil.
Non Operating Income was 8 + 68 + 66 + -162 = $-20 Mil.
Cash Flow from Operations was 2843 + 3226 + 2801 + 1590 = $10,460 Mil.
Accounts Receivable was $253 Mil.
Revenue was 2530 + 2512 + 2450 + 2430 = $9,922 Mil.
Gross Profit was 1294 + 1307 + 1237 + 1226 = $5,064 Mil.
Total Current Assets was $1,612 Mil.
Total Assets was $40,524 Mil.
Property, Plant and Equipment(Net PPE) was $8,294 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,150 Mil.
Selling, General & Admin. Expense(SGA) was $709 Mil.
Total Current Liabilities was $1,925 Mil.
Long-Term Debt was $37,124 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)
=(1311 / 36637) / (253 / 9922)
=0.0357835 / 0.02549889
=1.4033

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)
=(5064 / 9922) / (19286 / 36637)
=0.51038097 / 0.52640773
=0.9696

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 - (4666 + 32699) / 149444) / (1 - (1612 + 8294) / 40524)
=0.74997323 / 0.75555227
=0.9926

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
=36637 / 9922
=3.6925

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))
=(2150 / (2150 + 8294)) / (8918 / (8918 + 32699))
=0.20585982 / 0.21428743
=0.9607

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)
=(2301 / 36637) / (709 / 9922)
=0.06280536 / 0.07145737
=0.8789

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)
=((60837 + 9520) / 149444) / ((37124 + 1925) / 40524)
=0.47079173 / 0.96360182
=0.4886

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
=(3865 - -20 - 10460) / 149444
=-0.044

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.

Charter Communications Inc has a M-score of 0.25 signals that the company is likely to 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.

Charter Communications Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.05810.9141.43460.71181.06320.83821.09050.91411.7262
GMI 0.98860.99020.99761.11391.39740.7310.80381.13250.9572
AQI 0.99540.8790.95031.03730.98150.96591.23581.21240.9715
SGI 1.09051.07950.77871.39921.02051.04161.11691.07092.9734
DEPI 1.00250.99261.6630.68480.9740.97640.93940.98871.1716
SGAI 1.0161.0030.95420.27193.528500.53682.4320.8918
LVGI 1.07441.14310.51410.9961.05641.00171.02071.03820.4848
TATA -0.1266-0.2031-0.1101-0.1322-0.1255-0.1363-0.1039-0.0634-0.0301
M-score -2.97-3.54-2.57-2.84-3.24-3.22-2.72-2.90-0.02

Charter Communications Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.09051.10791.17771.0020.91410.89522.8861.92291.72621.4033
GMI 0.80380.8680.86820.7461.13251.11981.10571.16650.95720.9696
AQI 1.23580.68630.97841.30461.21242.13631.52880.99490.97150.9926
SGI 1.11691.09811.08161.07941.07091.07061.44642.2122.97343.6925
DEPI 0.93940.95030.97210.98030.98870.98732.42771.55241.17160.9607
SGAI 0.53680.4820.53741.03782.4322.15721.86491.19860.89180.8789
LVGI 1.02071.02340.99691.041.03821.04310.51520.48380.48480.4886
TATA -0.1039-0.1035-0.1375-0.0659-0.0634-0.0615-0.0022-0.016-0.0301-0.044
M-score -2.72-2.90-2.89-2.75-2.90-2.490.09-0.34-0.020.25
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