Bupa Arabia for Cooperative Insurance Co 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 Bupa Arabia for Cooperative Insurance Co 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 * 0.8804 | + | 0.528 * 1 | + | 0.404 * 0.9392 | + | 0.892 * 1.2316 | + | 0.115 * 0.8608 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 0 | + | 4.679 * -0.098985 | - | 0.327 * 1.0807 |
| = | -2.74 |
* 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 ﷼405 Mil.
Revenue was 4408.682 + 4249.402 + 4018.83 + 3873.614 = ﷼16,551 Mil.
Gross Profit was 4408.682 + 4249.402 + 4018.83 + 3873.614 = ﷼16,551 Mil.
Total Current Assets was ﷼5,439 Mil.
Total Assets was ﷼14,438 Mil.
Property, Plant and Equipment(Net PPE) was ﷼213 Mil.
Depreciation, Depletion and Amortization(DDA) was ﷼56 Mil.
Selling, General, & Admin. Expense(SGA) was ﷼0 Mil.
Total Current Liabilities was ﷼701 Mil.
Long-Term Debt & Capital Lease Obligation was ﷼166 Mil.
Net Income was 104.867 + 275.35 + 371.35 + 188.596 = ﷼940 Mil.
Non Operating Income was 22.847 + 22.813 + 22.11 + 24.295 = ﷼92 Mil.
Cash Flow from Operations was 432.992 + 519.302 + 437.814 + 887.166 = ﷼2,277 Mil.
|
Total Receivables was ﷼374 Mil.
Revenue was 3629.383 + 3551.307 + 3242.132 + 3015.606 = ﷼13,438 Mil.
Gross Profit was 3629.383 + 3551.307 + 3242.132 + 3015.606 = ﷼13,438 Mil.
Total Current Assets was ﷼4,036 Mil.
Total Assets was ﷼12,115 Mil.
Property, Plant and Equipment(Net PPE) was ﷼230 Mil.
Depreciation, Depletion and Amortization(DDA) was ﷼50 Mil.
Selling, General, & Admin. Expense(SGA) was ﷼122 Mil.
Total Current Liabilities was ﷼488 Mil.
Long-Term Debt & Capital Lease Obligation was ﷼185 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) |
| = | (405.032 / 16550.528) | / | (373.555 / 13438.428) |
| = | 0.024472 | / | 0.027798 |
| | = | 0.8804 |
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) |
| = | (13438.428 / 13438.428) | / | (16550.528 / 16550.528) |
| = | 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 - (5438.996 + 213.267) / 14438.351) | / | (1 - (4036.043 + 229.59) / 12114.931) |
| = | 0.608524 | / | 0.647903 |
| | = | 0.9392 |
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 |
| = | 16550.528 | / | 13438.428 |
| | = | 1.2316 |
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)) |
| = | (49.858 / (49.858 + 229.59)) | / | (55.757 / (55.757 + 213.267)) |
| = | 0.178416 | / | 0.207257 |
| | = | 0.8608 |
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) |
| = | (0 / 16550.528) | / | (122.299 / 13438.428) |
| = | 0 | / | 0.009101 |
| | = | 0 |
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) |
| = | ((166.066 + 700.927) / 14438.351) | / | ((184.682 + 488.453) / 12114.931) |
| = | 0.060048 | / | 0.055562 |
| | = | 1.0807 |
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 |
| = | (940.163 - 92.065 | - | 2277.274) | / | 14438.351 |
| | = | -0.098985 |
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.
Bupa Arabia for Cooperative Insurance Co has a M-score of -2.74 suggests that the company is unlikely to be a manipulator.
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