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GuruFocus has detected 3 Warning Signs with Viacom Inc $VIA.
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Viacom Inc (NAS:VIA)
Beneish M-Score
-2.38 (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.

Viacom Inc has a M-score of -2.38 suggests that the company is not a manipulator.

VIA' s Beneish M-Score Range Over the Past 10 Years
Min: -2.73   Max: -1.94
Current: -2.38

-2.73
-1.94

During the past 13 years, the highest Beneish M-Score of Viacom Inc was -1.94. The lowest was -2.73. And the median was -2.53.


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 Viacom 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 * 1.0961+0.528 * 1.1414+0.404 * 0.9837+0.892 * 0.9932+0.115 * 1.004
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0604+4.679 * -0.013-0.327 * 0.9525
=-2.38

* 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 $3,031 Mil.
Revenue was 3256 + 3324 + 3226 + 3107 = $12,913 Mil.
Gross Profit was 1312 + 1505 + 1364 + 1532 = $5,713 Mil.
Total Current Assets was $5,128 Mil.
Total Assets was $23,342 Mil.
Property, Plant and Equipment(Net PPE) was $964 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,998 Mil.
Selling, General & Admin. Expense(SGA) was $2,928 Mil.
Total Current Liabilities was $3,560 Mil.
Long-Term Debt was $12,171 Mil.
Net Income was 121 + 396 + 254 + 432 = $1,203 Mil.
Non Operating Income was -20 + 16 + -4 + 22 = $14 Mil.
Cash Flow from Operations was 246 + 159 + 971 + 116 = $1,492 Mil.
Accounts Receivable was $2,784 Mil.
Revenue was 3001 + 3154 + 3788 + 3058 = $13,001 Mil.
Gross Profit was 1347 + 1561 + 1851 + 1806 = $6,565 Mil.
Total Current Assets was $4,734 Mil.
Total Assets was $22,565 Mil.
Property, Plant and Equipment(Net PPE) was $879 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,671 Mil.
Selling, General & Admin. Expense(SGA) was $2,780 Mil.
Total Current Liabilities was $4,470 Mil.
Long-Term Debt was $11,496 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)
=(3031 / 12913) / (2784 / 13001)
=0.2347247 / 0.21413737
=1.0961

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)
=(6565 / 13001) / (5713 / 12913)
=0.50496116 / 0.44242237
=1.1414

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 - (5128 + 964) / 23342) / (1 - (4734 + 879) / 22565)
=0.73901122 / 0.75125194
=0.9837

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
=12913 / 13001
=0.9932

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))
=(4671 / (4671 + 879)) / (4998 / (4998 + 964))
=0.84162162 / 0.83830929
=1.004

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)
=(2928 / 12913) / (2780 / 13001)
=0.22674824 / 0.21382971
=1.0604

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)
=((12171 + 3560) / 23342) / ((11496 + 4470) / 22565)
=0.6739354 / 0.70755595
=0.9525

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
=(1203 - 14 - 1492) / 23342
=-0.013

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.

Viacom Inc has a M-score of -2.38 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.

Viacom Inc Annual Data

Dec06Dec07Dec08Dec09Sep11Sep12Sep13Sep14Sep15Sep16
DSRI 0.99280.79641.39711.18721.02730.95111.0265
GMI 1.06191.11870.87240.9790.96531.08911.0379
AQI 0.98051.01640.99360.91851.081.03081.0096
SGI 1.17891.08960.90650.99330.99920.96260.9412
DEPI 0.9270.94631.02380.99541.00330.96281.009
SGAI 0.99721.00210.98911.0331.02561.02481.0591
LVGI 1.040.97320.83841.22231.09731.00980.9501
TATA -0.0022-0.02660.03-0.035-0.011-0.0198-0.0006
M-score -2.33-2.64-2.07-2.60-2.53-2.60-2.48

Viacom Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.01821.02260.91770.95111.06091.07411.12831.02651.07191.0961
GMI 1.00841.09721.09951.08911.08910.94841.01251.03791.05071.1414
AQI 1.01241.10821.07041.03081.03420.99511.00081.00960.99280.9837
SGI 1.01851.00861.0020.96260.93880.93980.96870.94120.96790.9932
DEPI 0.98940.96560.96380.96281.00341.00310.98851.0090.98741.004
SGAI 1.0131.01781.00181.02481.01781.00791.01041.05911.06611.0604
LVGI 1.10771.10371.07111.00980.97260.91740.91780.95010.96080.9525
TATA -0.0022-0.0337-0.0279-0.0198-0.01460.01090.0166-0.0006-0.0143-0.013
M-score -2.49-2.56-2.63-2.60-2.48-2.42-2.28-2.48-2.49-2.38
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