Ponce Financial 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 Ponce Financial 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 * 1.1499 | + | 0.528 * 1 | + | 0.404 * 0.9895 | + | 0.892 * 1.0408 | + | 0.115 * 0.8864 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 1.0604 | + | 4.679 * -0.001142 | - | 0.327 * 1.1075 |
| = | -2.37 |
* 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 $18.01 Mil.
Revenue was 17.985 + 21.8 + 17.429 + 16.652 = $73.87 Mil.
Gross Profit was 17.985 + 21.8 + 17.429 + 16.652 = $73.87 Mil.
Total Current Assets was $277.35 Mil.
Total Assets was $2,750.72 Mil.
Property, Plant and Equipment(Net PPE) was $47.33 Mil.
Depreciation, Depletion and Amortization(DDA) was $4.53 Mil.
Selling, General, & Admin. Expense(SGA) was $33.20 Mil.
Total Current Liabilities was $11.97 Mil.
Long-Term Debt & Capital Lease Obligation was $717.11 Mil.
Net Income was 0.518 + 2.59 + -0.087 + 0.331 = $3.35 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.00 Mil.
Cash Flow from Operations was 31.94 + -25.732 + -5.861 + 6.146 = $6.49 Mil.
|
Total Receivables was $15.05 Mil.
Revenue was 16.149 + 18.97 + 17.162 + 18.69 = $70.97 Mil.
Gross Profit was 16.149 + 18.97 + 17.162 + 18.69 = $70.97 Mil.
Total Current Assets was $200.41 Mil.
Total Assets was $2,311.99 Mil.
Property, Plant and Equipment(Net PPE) was $50.87 Mil.
Depreciation, Depletion and Amortization(DDA) was $4.27 Mil.
Selling, General, & Admin. Expense(SGA) was $30.08 Mil.
Total Current Liabilities was $1.39 Mil.
Long-Term Debt & Capital Lease Obligation was $551.91 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) |
| = | (18.01 / 73.866) | / | (15.049 / 70.971) |
| = | 0.24382 | / | 0.212044 |
| | = | 1.1499 |
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) |
| = | (70.971 / 70.971) | / | (73.866 / 73.866) |
| = | 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 - (277.351 + 47.325) / 2750.722) | / | (1 - (200.408 + 50.869) / 2311.989) |
| = | 0.881967 | / | 0.891316 |
| | = | 0.9895 |
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 |
| = | 73.866 | / | 70.971 |
| | = | 1.0408 |
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)) |
| = | (4.266 / (4.266 + 50.869)) | / | (4.526 / (4.526 + 47.325)) |
| = | 0.077374 | / | 0.087289 |
| | = | 0.8864 |
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) |
| = | (33.199 / 73.866) | / | (30.082 / 70.971) |
| = | 0.449449 | / | 0.423863 |
| | = | 1.0604 |
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) |
| = | ((717.105 + 11.965) / 2750.722) | / | ((551.907 + 1.39) / 2311.989) |
| = | 0.265047 | / | 0.239316 |
| | = | 1.1075 |
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 |
| = | (3.352 - 0 | - | 6.493) | / | 2750.722 |
| | = | -0.001142 |
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.
Ponce Financial Group has a M-score of -2.37 suggests that the company is unlikely to be a manipulator.
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