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 * 0.6826 | + | 0.528 * 1 | + | 0.404 * 1.0052 | + | 0.892 * 1.2407 | + | 0.115 * 0.9818 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 0.9302 | + | 4.679 * 0.010015 | - | 0.327 * 1.0497 |
| = | -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 (Dec23) TTM: | Last Year (Dec22) TTM: |
Total Receivables was C$144,038 Mil.
Revenue was 51785.76 + 53800.609 + 51260.045 + 52471.568 = C$209,318 Mil.
Gross Profit was 51785.76 + 53800.609 + 51260.045 + 52471.568 = C$209,318 Mil.
Total Current Assets was C$1,239,637 Mil.
Total Assets was C$5,199,227 Mil.
Property, Plant and Equipment(Net PPE) was C$40,459 Mil.
Depreciation, Depletion and Amortization(DDA) was C$10,139 Mil.
Selling, General, & Admin. Expense(SGA) was C$68,824 Mil.
Total Current Liabilities was C$486,553 Mil.
Long-Term Debt & Capital Lease Obligation was C$525,672 Mil.
Net Income was 12486.271 + 17794.618 + 19227.499 + 17270.683 = C$66,779 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = C$0 Mil.
Cash Flow from Operations was 80805.91 + 61050.519 + 25064.039 + -152211.06 = C$14,709 Mil.
|
Total Receivables was C$170,069 Mil.
Revenue was 46884.552 + 43621.198 + 39319.804 + 38888.988 = C$168,715 Mil.
Gross Profit was 46884.552 + 43621.198 + 39319.804 + 38888.988 = C$168,715 Mil.
Total Current Assets was C$1,207,872 Mil.
Total Assets was C$4,979,912 Mil.
Property, Plant and Equipment(Net PPE) was C$37,677 Mil.
Depreciation, Depletion and Amortization(DDA) was C$9,227 Mil.
Selling, General, & Admin. Expense(SGA) was C$59,635 Mil.
Total Current Liabilities was C$521,676 Mil.
Long-Term Debt & Capital Lease Obligation was C$401,933 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) |
| = | (144038.201 / 209317.982) | / | (170069.256 / 168714.542) |
| = | 0.688131 | / | 1.00803 |
| | = | 0.6826 |
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) |
| = | (168714.542 / 168714.542) | / | (209317.982 / 209317.982) |
| = | 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 - (1239637.059 + 40458.631) / 5199227.248) | / | (1 - (1207872.236 + 37676.639) / 4979911.865) |
| = | 0.753791 | / | 0.749885 |
| | = | 1.0052 |
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 |
| = | 209317.982 | / | 168714.542 |
| | = | 1.2407 |
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)) |
| = | (9227.146 / (9227.146 + 37676.639)) | / | (10138.755 / (10138.755 + 40458.631)) |
| = | 0.196725 | / | 0.200381 |
| | = | 0.9818 |
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) |
| = | (68823.784 / 209317.982) | / | (59635.11 / 168714.542) |
| = | 0.3288 | / | 0.353468 |
| | = | 0.9302 |
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) |
| = | ((525672.42 + 486552.705) / 5199227.248) | / | ((401932.602 + 521676.226) / 4979911.865) |
| = | 0.194688 | / | 0.185467 |
| | = | 1.0497 |
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 |
| = | (66779.071 - 0 | - | 14709.408) | / | 5199227.248 |
| | = | 0.010015 |
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 -2.51 suggests that the company is unlikely to be a manipulator.
Quick Browse
Personalize
Premium Gurus 
Create New Portfolio
Portfolio Contest
NEOE:JPM has been successfully added to your