CIG Pannonia Life Insurance OJSC 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 CIG Pannonia Life Insurance OJSC 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 * 2.4513 | + | 0.528 * 1 | + | 0.404 * 1.001 | + | 0.892 * 0.8212 | + | 0.115 * 0.8578 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 0.953 | + | 4.679 * -0.00593 | - | 0.327 * 0.8317 |
| = | -1.28 |
* 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 (Dec22) TTM: | Last Year (Dec21) TTM: |
Total Receivables was Ft4,353 Mil.
Revenue was Ft28,668 Mil.
Gross Profit was Ft28,668 Mil.
Total Current Assets was Ft0 Mil.
Total Assets was Ft129,943 Mil.
Property, Plant and Equipment(Net PPE) was Ft558 Mil.
Depreciation, Depletion and Amortization(DDA) was Ft410 Mil.
Selling, General, & Admin. Expense(SGA) was Ft356 Mil.
Total Current Liabilities was Ft0 Mil.
Long-Term Debt & Capital Lease Obligation was Ft482 Mil.
Net Income was Ft1,208 Mil.
Gross Profit was Ft-30 Mil.
Cash Flow from Operations was Ft2,008 Mil.
|
Total Receivables was Ft2,162 Mil.
Revenue was Ft34,911 Mil.
Gross Profit was Ft34,911 Mil.
Total Current Assets was Ft0 Mil.
Total Assets was Ft127,832 Mil.
Property, Plant and Equipment(Net PPE) was Ft673 Mil.
Depreciation, Depletion and Amortization(DDA) was Ft384 Mil.
Selling, General, & Admin. Expense(SGA) was Ft455 Mil.
Total Current Liabilities was Ft0 Mil.
Long-Term Debt & Capital Lease Obligation was Ft570 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) |
| = | (4352.841 / 28667.744) | / | (2162.47 / 34910.907) |
| = | 0.151838 | / | 0.061943 |
| | = | 2.4513 |
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) |
| = | (34910.907 / 34910.907) | / | (28667.744 / 28667.744) |
| = | 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 + 558.029) / 129943.077) | / | (1 - (0 + 673.119) / 127832.303) |
| = | 0.995706 | / | 0.994734 |
| | = | 1.001 |
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 |
| = | 28667.744 | / | 34910.907 |
| | = | 0.8212 |
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)) |
| = | (384.303 / (384.303 + 673.119)) | / | (410.249 / (410.249 + 558.029)) |
| = | 0.363434 | / | 0.423689 |
| | = | 0.8578 |
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) |
| = | (356.115 / 28667.744) | / | (455.074 / 34910.907) |
| = | 0.012422 | / | 0.013035 |
| | = | 0.953 |
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) |
| = | ((481.596 + 0) / 129943.077) | / | ((569.648 + 0) / 127832.303) |
| = | 0.003706 | / | 0.004456 |
| | = | 0.8317 |
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 |
| = | (1207.577 - -29.522 | - | 2007.642) | / | 129943.077 |
| | = | -0.00593 |
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.
CIG Pannonia Life Insurance OJSC has a M-score of -1.28 signals that the company is likely to be a manipulator.
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