The Montier C-Score is a way identify companies that have an increased risk of earnings manipulation. James Montier aimed to create a simple scoring system that would highlight such companies and the C-Score was the result. This is measured on a TTM basis.
An analogue to the Piotroski, it measures six inputs in a binary fashion to create a score between zero and six.
Inputs include: the divergence between net income and cash-flow, increasing days sales outstanding, increasing days sales of inventory, increasing current assets to revenues, declining depreciation relative to PPE and high total asset growth.
Montier found that companies with high C-Scores under performed the market by 8% per annum, generating a mere 1.8% return between 1993 and 2007.
He recommended using it in tandem with a high valuation measure.
| Ticker | Name | Montier C-Score | StockRank™ |
|---|---|---|---|
| LON:ABF | Associated British Foods | 0.00 | 92 |
| LON:HSBA | HSBC Holdings | 0.00 | 94 |
| LON:LGEN | Legal & General | 0.00 | 44 |
| LON:NWG | Natwest | 0.00 | 68 |
| LON:VOD | Vodafone | 0.00 | 98 |