The Goldmanchs Group 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 The Goldmanchs Group 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 * 0.9908 | + | 0.528 * 1 | + | 0.404 * 1.0369 | + | 0.892 * 1.0072 | + | 0.115 * 0.4125 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 1.0339 | + | 4.679 * 0.013106 | - | 0.327 * 0.8485 |
| = | -2.43 |
* 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 (Dec23) TTM: | Last Year (Dec22) TTM: |
Total Receivables was C$199,331 Mil.
Revenue was 15184.229 + 15989.583 + 14475.097 + 16726.099 = C$62,375 Mil.
Gross Profit was 15184.229 + 15989.583 + 14475.097 + 16726.099 = C$62,375 Mil.
Total Current Assets was C$567,936 Mil.
Total Assets was C$2,202,363 Mil.
Property, Plant and Equipment(Net PPE) was C$17,998 Mil.
Depreciation, Depletion and Amortization(DDA) was C$6,537 Mil.
Selling, General, & Admin. Expense(SGA) was C$21,752 Mil.
Total Current Liabilities was C$439,055 Mil.
Long-Term Debt & Capital Lease Obligation was C$335,533 Mil.
Net Income was 2693.933 + 2784.68 + 1615.578 + 4425.082 = C$11,519 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = C$0 Mil.
Cash Flow from Operations was -38045.093 + -34550.055 + 42383.669 + 12867.493 = C$-17,344 Mil.
|
Total Receivables was C$199,736 Mil.
Revenue was 14390.59 + 15973.453 + 15190.666 + 16373.178 = C$61,928 Mil.
Gross Profit was 14390.59 + 15973.453 + 15190.666 + 16373.178 = C$61,928 Mil.
Total Current Assets was C$546,160 Mil.
Total Assets was C$1,958,684 Mil.
Property, Plant and Equipment(Net PPE) was C$26,146 Mil.
Depreciation, Depletion and Amortization(DDA) was C$3,229 Mil.
Selling, General, & Admin. Expense(SGA) was C$20,888 Mil.
Total Current Liabilities was C$463,584 Mil.
Long-Term Debt & Capital Lease Obligation was C$348,318 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) |
| = | (199330.903 / 62375.008) | / | (199736.179 / 61927.887) |
| = | 3.195685 | / | 3.225303 |
| | = | 0.9908 |
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) |
| = | (61927.887 / 61927.887) | / | (62375.008 / 62375.008) |
| = | 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 - (567935.503 + 17997.564) / 2202362.51) | / | (1 - (546160.471 + 26145.691) / 1958683.941) |
| = | 0.733952 | / | 0.707811 |
| | = | 1.0369 |
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 |
| = | 62375.008 | / | 61927.887 |
| | = | 1.0072 |
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)) |
| = | (3228.706 / (3228.706 + 26145.691)) | / | (6537.374 / (6537.374 + 17997.564)) |
| = | 0.109916 | / | 0.266452 |
| | = | 0.4125 |
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) |
| = | (21751.901 / 62375.008) | / | (20888.462 / 61927.887) |
| = | 0.348728 | / | 0.337303 |
| | = | 1.0339 |
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) |
| = | ((335532.818 + 439054.699) / 2202362.51) | / | ((348318.041 + 463584.049) / 1958683.941) |
| = | 0.351708 | / | 0.414514 |
| | = | 0.8485 |
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 |
| = | (11519.273 - 0 | - | -17343.986) | / | 2202362.51 |
| | = | 0.013106 |
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.
The Goldmanchs Group has a M-score of -2.43 suggests that the company is unlikely to be a manipulator.
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