Cedar Fair LP Beneish M-Score Calculation
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski 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 Cedar Fair LP 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 * 0.6411 | + | 0.528 * 0.9989 | + | 0.404 * 1.522 | + | 0.892 * 0.7285 | + | 0.115 * 1.0739 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 1.2184 | + | 4.679 * -0.0386 | - | 0.327 * 1.1019 |
| = | -3.09 |
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
| This Year (Jun20) TTM: | Last Year (Jun19) TTM: |
Accounts Receivable was USD42 Mil.
Revenue was 6.586 + 53.635 + 257.246 + 714.512 = USD1,032 Mil.
Gross Profit was 4.581 + 47.25 + 236.914 + 656.037 = USD945 Mil.
Total Current Assets was USD415 Mil.
Total Assets was USD2,658 Mil.
Property, Plant and Equipment(Net PPE) was USD1,876 Mil.
Depreciation, Depletion and Amortization(DDA) was USD161 Mil.
Selling, General, & Admin. Expense(SGA) was USD179 Mil.
Total Current Liabilities was USD231 Mil.
Long-Term Debt & Capital Lease Obligation was USD2,671 Mil.
Net Income was -132.552 + -215.977 + 2.785 + 189.955 = USD-156 Mil.
Non Operating Income was 8.49 + -148.75 + 12.656 + -10.26 = USD-138 Mil.
Cash Flow from Operations was -114.522 + -105.139 + 13.902 + 290.455 = USD85 Mil.
|
Accounts Receivable was USD90 Mil.
Revenue was 436.19 + 66.977 + 249.784 + 663.703 = USD1,417 Mil.
Gross Profit was 396.382 + 59.328 + 229.963 + 609.812 = USD1,295 Mil.
Total Current Assets was USD500 Mil.
Total Assets was USD2,533 Mil.
Property, Plant and Equipment(Net PPE) was USD1,804 Mil.
(DDA) was USD167 Mil.
Selling, General, & Admin. Expense(SGA) was USD202 Mil.
Total Current Liabilities was USD360 Mil.
Long-Term Debt & Capital Lease Obligation was USD2,150 Mil.
|
1. DSRI = Days Sales in Receivables Index
Measured as the ratio of Revenue in Accounts Receivable 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) |
| = | (41.822 / 1031.979) | / | (89.546 / 1416.654) |
| = | 0.04052602 | / | 0.06320951 |
| | = | 0.6411 |
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) |
| = | (1295.485 / 1416.654) | / | (944.782 / 1031.979) |
| = | 0.91446818 | / | 0.91550506 |
| | = | 0.9989 |
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 Property, Plant and Equipment to Total Assets.
| AQI | = | (1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) | / | (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1) |
| = | (1 - (415.286 + 1875.906) / 2657.534) | / | (1 - (499.582 + 1803.82) / 2532.806) |
| = | 0.13785035 | / | 0.09057306 |
| | = | 1.522 |
4. SGI = Sales Growth Index
Ratio of Revenue 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 |
| = | 1031.979 | / | 1416.654 |
| | = | 0.7285 |
5. DEPI = Depreciation Index
Measured as the ratio of the rate of Depreciation, Depletion and Amortization 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)) |
| = | (167.282 / (167.282 + 1803.82)) | / | (160.974 / (160.974 + 1875.906)) |
| = | 0.08486725 | / | 0.07902969 |
| | = | 1.0739 |
6. SGAI = Sales, General and Administrative expenses Index
The ratio of Selling, General, & Admin. Expense(SGA) to Sales 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) |
| = | (179.341 / 1031.979) | / | (202.057 / 1416.654) |
| = | 0.17378358 | / | 0.14262975 |
| | = | 1.2184 |
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 in leverage
| LVGI | = | ((LTD_t + CurrentLiabilities_t) / TotalAssets_t) | / | ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1) |
| = | ((2670.607 + 231.473) / 2657.534) | / | ((2150.24 + 359.748) / 2532.806) |
| = | 1.0920199 | / | 0.99099102 |
| | = | 1.1019 |
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 |
| = | (-155.789 - -137.864 | - | 84.696) | / | 2657.534 |
| | = | -0.0386 |
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.
Cedar Fair LP has a M-score of -3.09 suggests that the company will not be a manipulator.
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