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GuruFocus has detected 4 Warning Signs with DryShips Inc $DRYS.
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DryShips Inc (NAS:DRYS)
Beneish M-Score
-26.33 (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.

DryShips Inc has a M-score of -26.33 suggests that the company is not a manipulator.

DRYS' s Beneish M-Score Range Over the Past 10 Years
Min: -46.46   Max: 2.25
Current: -26.33

-46.46
2.25

During the past 13 years, the highest Beneish M-Score of DryShips Inc was 2.25. The lowest was -46.46. And the median was -2.25.


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 DryShips 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+0.528 * -43.3013+0.404 * 0+0.892 * 0.0944+0.115 * 25.8226
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 5.7053+4.679 * -0.1273-0.327 * 0.3086
=-26.33

* 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 $0.00 Mil.
Revenue was 11.808 + 9.65 + 17.247 + 8.016 = $46.72 Mil.
Gross Profit was 1.605 + -2.204 + 5.84 + -5.786 = $-0.55 Mil.
Total Current Assets was $426.55 Mil.
Total Assets was $588.11 Mil.
Property, Plant and Equipment(Net PPE) was $161.56 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.42 Mil.
Selling, General & Admin. Expense(SGA) was $38.53 Mil.
Total Current Liabilities was $0.00 Mil.
Long-Term Debt was $177.00 Mil.
Net Income was -10.707 + -77.516 + -5.247 + -9.108 = $-102.58 Mil.
Non Operating Income was -0.175 + 13.073 + 0.144 + -1.728 = $11.31 Mil.
Cash Flow from Operations was -19.146 + -7.208 + -5.346 + -7.318 = $-39.02 Mil.
Accounts Receivable was $9.70 Mil.
Revenue was 17.021 + 23.766 + 50.766 + 403.182 = $494.74 Mil.
Gross Profit was -0.688 + -0.89 + 5.04 + 246.433 = $249.90 Mil.
Total Current Assets was $133.70 Mil.
Total Assets was $287.12 Mil.
Property, Plant and Equipment(Net PPE) was $95.57 Mil.
Depreciation, Depletion and Amortization(DDA) was $109.82 Mil.
Selling, General & Admin. Expense(SGA) was $71.51 Mil.
Total Current Liabilities was $280.04 Mil.
Long-Term Debt was $0.00 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)
=(0 / 46.721) / (9.696 / 494.735)
=0 / 0.01959837
=0

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)
=(249.895 / 494.735) / (-0.545 / 46.721)
=0.5051088 / -0.01166499
=-43.3013

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 - (426.549 + 161.556) / 588.105) / (1 - (133.703 + 95.566) / 287.115)
=0 / 0.20147328
=0

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
=46.721 / 494.735
=0.0944

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))
=(109.818 / (109.818 + 95.566)) / (3.416 / (3.416 + 161.556))
=0.53469598 / 0.02070654
=25.8226

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)
=(38.531 / 46.721) / (71.514 / 494.735)
=0.82470409 / 0.14455011
=5.7053

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)
=((176.997 + 0) / 588.105) / ((0 + 280.043) / 287.115)
=0.30096156 / 0.97536875
=0.3086

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
=(-102.578 - 11.314 - -39.018) / 588.105
=-0.1273

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.

DryShips Inc has a M-score of -26.33 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.

DryShips Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 2.56221.47631.67610.36044.43051.11331.49250.8580.05613.9755
GMI 0.84991.09471.10940.96281.1761.4480.83940.93221.0182-10.0659
AQI 7.12470.06640.790610.12730.57180.54040.6020.634820.22080.0002
SGI 2.3451.85510.75861.04871.25351.12291.23291.46480.44370.0535
DEPI 01.06430.94921.15991.01570.83821.06360.8260.067620.0676
SGAI 2.30949.03591.85170.24111.11011.35320.91460.6281.21717.068
LVGI 0.89561.24530.72540.84351.26591.03251.09750.95841.29441.114
TATA 0.0003-0.1406-0.0568-0.0255-0.0417-0.0484-0.043-0.0427-6.3259-0.944
M-score 2.25-3.72-2.430.720.52-2.53-2.28-2.52-25.91-0.94

DryShips Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.8581.11060.11350.0420.0560.07853.186710.898513.97550
GMI 0.93220.95110.93710.97221.01821.122-24.9482-24.6495-10.0659-43.3013
AQI 0.63480.51379.726929.658620.220819.41980.21460.10660.00020
SGI 1.46481.36221.15050.76520.44370.22280.04750.04280.05350.0944
DEPI 0.8260.81140.1790.04490.06760.0931.367229.721520.067625.8226
SGAI 0.6280.71990.78910.98691.21711.70295.67716.49417.0685.7053
LVGI 0.95840.96250.72410.80291.29441.6362.20911.92291.1140.3086
TATA -0.0427-0.0466-0.7425-2.1867-6.3259-10.5821-6.048-2.6645-0.944-0.1273
M-score -2.52-2.46-3.11-2.28-25.91-46.46-44.79-18.54-0.94-26.33
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