Croatia Osiguranje d.d 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 Croatia Osiguranje d.d 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 * 0.0371 | + | 0.528 * 1 | + | 0.404 * 0.9925 | + | 0.892 * 1.1239 | + | 0.115 * 1.0065 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 0.0597 | + | 4.679 * 0.034653 | - | 0.327 * 1.1052 |
| = | -2.97 |
* 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 (Sep23) TTM: | Last Year (Sep22) TTM: |
Total Receivables was €7.3 Mil.
Revenue was 132.699 + 117.586 + 103.85 + 134.361 = €488.5 Mil.
Gross Profit was 132.699 + 117.586 + 103.85 + 134.361 = €488.5 Mil.
Total Current Assets was €0.0 Mil.
Total Assets was €1,766.9 Mil.
Property, Plant and Equipment(Net PPE) was €114.6 Mil.
Depreciation, Depletion and Amortization(DDA) was €13.2 Mil.
Selling, General, & Admin. Expense(SGA) was €17.2 Mil.
Total Current Liabilities was €0.0 Mil.
Long-Term Debt & Capital Lease Obligation was €44.3 Mil.
Net Income was 2.578 + 13.484 + 15.103 + 4.225 = €35.4 Mil.
Non Operating Income was 11.265 + 3.587 + 2.874 + 2.07 = €19.8 Mil.
Cash Flow from Operations was 6.807 + 10.639 + -101.941 + 38.862 = €-45.6 Mil.
|
Total Receivables was €174.9 Mil.
Revenue was 118.961 + 107.499 + 98.925 + 109.256 = €434.6 Mil.
Gross Profit was 118.961 + 107.499 + 98.925 + 109.256 = €434.6 Mil.
Total Current Assets was €0.0 Mil.
Total Assets was €1,812.2 Mil.
Property, Plant and Equipment(Net PPE) was €104.8 Mil.
Depreciation, Depletion and Amortization(DDA) was €12.2 Mil.
Selling, General, & Admin. Expense(SGA) was €256.7 Mil.
Total Current Liabilities was €0.0 Mil.
Long-Term Debt & Capital Lease Obligation was €41.2 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) |
| = | (7.297 / 488.496) | / | (174.851 / 434.641) |
| = | 0.014938 | / | 0.402288 |
| | = | 0.0371 |
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) |
| = | (434.641 / 434.641) | / | (488.496 / 488.496) |
| = | 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 + 114.636) / 1766.874) | / | (1 - (0 + 104.769) / 1812.2) |
| = | 0.935119 | / | 0.942187 |
| | = | 0.9925 |
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 |
| = | 488.496 | / | 434.641 |
| | = | 1.1239 |
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)) |
| = | (12.166 / (12.166 + 104.769)) | / | (13.216 / (13.216 + 114.636)) |
| = | 0.104041 | / | 0.10337 |
| | = | 1.0065 |
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) |
| = | (17.211 / 488.496) | / | (256.673 / 434.641) |
| = | 0.035233 | / | 0.59054 |
| | = | 0.0597 |
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) |
| = | ((44.346 + 0) / 1766.874) | / | ((41.154 + 0) / 1812.2) |
| = | 0.025099 | / | 0.022709 |
| | = | 1.1052 |
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 |
| = | (35.39 - 19.796 | - | -45.633) | / | 1766.874 |
| | = | 0.034653 |
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.
Croatia Osiguranje d.d has a M-score of -2.97 suggests that the company is unlikely to be a manipulator.
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