Bank Bradesco 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 Bank Bradesco 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 * 0.9728 | + | 0.528 * 1 | + | 0.404 * 1.0012 | + | 0.892 * 0.9718 | + | 0.115 * 0.8689 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 1.0431 | + | 4.679 * 0.008423 | - | 0.327 * 0.9876 |
| = | -2.51 |
* 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 R$23,037 Mil.
Revenue was 25022.807 + 25808.893 + 24557.409 + 24516.954 = R$99,906 Mil.
Gross Profit was 25022.807 + 25808.893 + 24557.409 + 24516.954 = R$99,906 Mil.
Total Current Assets was R$0 Mil.
Total Assets was R$1,956,078 Mil.
Property, Plant and Equipment(Net PPE) was R$10,668 Mil.
Depreciation, Depletion and Amortization(DDA) was R$6,492 Mil.
Selling, General, & Admin. Expense(SGA) was R$41,130 Mil.
Total Current Liabilities was R$0 Mil.
Long-Term Debt & Capital Lease Obligation was R$365,970 Mil.
Net Income was 4120.943 + 1435.139 + 3399.975 + 4016.423 = R$12,972 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = R$0 Mil.
Cash Flow from Operations was 17683.276 + -81008.161 + 79570.194 + -19748.894 = R$-3,504 Mil.
|
Total Receivables was R$24,367 Mil.
Revenue was 25827.301 + 26204.929 + 24201.715 + 26566.416 = R$102,800 Mil.
Gross Profit was 25827.301 + 26204.929 + 24201.715 + 26566.416 = R$102,800 Mil.
Total Current Assets was R$0 Mil.
Total Assets was R$1,828,732 Mil.
Property, Plant and Equipment(Net PPE) was R$12,202 Mil.
Depreciation, Depletion and Amortization(DDA) was R$5,975 Mil.
Selling, General, & Admin. Expense(SGA) was R$40,572 Mil.
Total Current Liabilities was R$0 Mil.
Long-Term Debt & Capital Lease Obligation was R$346,429 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) |
| = | (23037.081 / 99906.063) | / | (24366.626 / 102800.361) |
| = | 0.230587 | / | 0.237029 |
| | = | 0.9728 |
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) |
| = | (102800.361 / 102800.361) | / | (99906.063 / 99906.063) |
| = | 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 + 10667.553) / 1956078.468) | / | (1 - (0 + 12201.684) / 1828731.521) |
| = | 0.994546 | / | 0.993328 |
| | = | 1.0012 |
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 |
| = | 99906.063 | / | 102800.361 |
| | = | 0.9718 |
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)) |
| = | (5974.743 / (5974.743 + 12201.684)) | / | (6491.707 / (6491.707 + 10667.553)) |
| = | 0.328708 | / | 0.378321 |
| | = | 0.8689 |
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) |
| = | (41129.693 / 99906.063) | / | (40572.216 / 102800.361) |
| = | 0.411684 | / | 0.39467 |
| | = | 1.0431 |
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) |
| = | ((365969.539 + 0) / 1956078.468) | / | ((346428.916 + 0) / 1828731.521) |
| = | 0.187093 | / | 0.189437 |
| | = | 0.9876 |
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 |
| = | (12972.48 - 0 | - | -3503.585) | / | 1956078.468 |
| | = | 0.008423 |
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.
Bank Bradesco has a M-score of -2.51 suggests that the company is unlikely to be a manipulator.
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