JPMorgan Chase 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 JPMorgan Chase 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 * 1.4321 | + | 0.528 * 1 | + | 0.404 * 1.0001 | + | 0.892 * 3.3525 | + | 0.115 * 1.2604 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 0.9868 | + | 4.679 * 0.032079 | - | 0.327 * 1.2263 |
| = | 0.12 |
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
| This Year (Mar24) TTM: | Last Year (Mar23) TTM: |
Total Receivables was ARS109,375,879 Mil.
Revenue was 35307490.6 + 13934600.013 + 13914362.333 + 9259679.926 = ARS72,416,133 Mil.
Gross Profit was 35307490.6 + 13934600.013 + 13914362.333 + 9259679.926 = ARS72,416,133 Mil.
Total Current Assets was ARS0 Mil.
Total Assets was ARS3,446,437,556 Mil.
Property, Plant and Equipment(Net PPE) was ARS25,510,058 Mil.
Depreciation, Depletion and Amortization(DDA) was ARS3,721,256 Mil.
Selling, General, & Admin. Expense(SGA) was ARS24,442,178 Mil.
Total Current Liabilities was ARS0 Mil.
Long-Term Debt & Capital Lease Obligation was ARS333,522,166 Mil.
Net Income was 11305507.692 + 3359827.003 + 4602192.577 + 3473279.972 = ARS22,740,807 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = ARS0 Mil.
Cash Flow from Operations was -129878117.208 + 21743391.02 + 15789394.485 + 4527599.964 = ARS-87,817,732 Mil.
|
Total Receivables was ARS22,780,676 Mil.
Revenue was 7575647.576 + 5785936.64 + 4543942.833 + 3695214.021 = ARS21,600,741 Mil.
Gross Profit was 7575647.576 + 5785936.64 + 4543942.833 + 3695214.021 = ARS21,600,741 Mil.
Total Current Assets was ARS0 Mil.
Total Assets was ARS739,687,470 Mil.
Property, Plant and Equipment(Net PPE) was ARS5,583,948 Mil.
Depreciation, Depletion and Amortization(DDA) was ARS1,067,254 Mil.
Selling, General, & Admin. Expense(SGA) was ARS7,388,143 Mil.
Total Current Liabilities was ARS0 Mil.
Long-Term Debt & Capital Lease Obligation was ARS58,373,853 Mil.
|
1. DSRI = Days Sales in Receivables Index
Measured as the ratio of Revenue in Total 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) |
| = | (109375879.359 / 72416132.872) | / | (22780676.33 / 21600741.07) |
| = | 1.51038 | / | 1.054625 |
| | = | 1.4321 |
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) |
| = | (21600741.07 / 21600741.07) | / | (72416132.872 / 72416132.872) |
| = | 1 | / | 1 |
| | = | 1 |
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 - (0 + 25510057.934) / 3446437556.089) | / | (1 - (0 + 5583948.43) / 739687469.966) |
| = | 0.992598 | / | 0.992451 |
| | = | 1.0001 |
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 |
| = | 72416132.872 | / | 21600741.07 |
| | = | 3.3525 |
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)) |
| = | (1067253.919 / (1067253.919 + 5583948.43)) | / | (3721256.098 / (3721256.098 + 25510057.934)) |
| = | 0.16046 | / | 0.127304 |
| | = | 1.2604 |
Note: If the Depreciation, Depletion and Amortization data is not available, we assume that the depreciation rate is constant and set the Depreciation Index to 1.
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) |
| = | (24442177.712 / 72416132.872) | / | (7388143.463 / 21600741.07) |
| = | 0.337524 | / | 0.342032 |
| | = | 0.9868 |
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) |
| = | ((333522165.67 + 0) / 3446437556.089) | / | ((58373853.309 + 0) / 739687469.966) |
| = | 0.096773 | / | 0.078917 |
| | = | 1.2263 |
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 |
| = | (22740807.244 - 0 | - | -87817731.739) | / | 3446437556.089 |
| | = | 0.032079 |
An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator. An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.
JPMorgan Chase has a M-score of 0.12 signals that the company is likely to be a manipulator.
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