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Note: Financial institutions were excluded from the sample in Beneish paper when calculating Beneish M-Score. Thus, the prediction might not fit banks and insurance companies.
The zones of discrimination for M-Score is as such:
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.
Good Sign:
Beneish M-Score -2.11 no higher than -1.78, which implies that the company is unlikely to be a manipulator.
The historical rank and industry rank for Assured Guaranty's Beneish M-Score or its related term are showing as below:
During the past 13 years, the highest Beneish M-Score of Assured Guaranty was -1.70. The lowest was -2.62. And the median was -2.07.
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 Assured Guaranty 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 * 1.133 | + | 0.528 * 1 | + | 0.404 * 1.3838 | + | 0.892 * 0.9256 | + | 0.115 * 1 | |
- | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI | |||||||
- | 0.172 * 0.7967 | + | 4.679 * 0.055592 | - | 0.327 * 1.4099 | |||||||
= | -2.11 |
* 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 (Jun24) TTM: | Last Year (Jun23) TTM: |
Total Receivables was $1,765.0 Mil. Revenue was 192 + 226 + 282 + 146 = $846.0 Mil. Gross Profit was 192 + 226 + 282 + 146 = $846.0 Mil. Total Current Assets was $0.0 Mil. Total Assets was $12,088.0 Mil. Property, Plant and Equipment(Net PPE) was $378.0 Mil. Depreciation, Depletion and Amortization(DDA) was $0.0 Mil. Selling, General, & Admin. Expense(SGA) was $205.0 Mil. Total Current Liabilities was $0.0 Mil. Long-Term Debt & Capital Lease Obligation was $1,696.0 Mil. Net Income was 78 + 109 + 376 + 157 = $720.0 Mil. Non Operating Income was 9 + 1 + 23 + 6 = $39.0 Mil. Cash Flow from Operations was 58 + -74 + 203 + -178 = $9.0 Mil. |
Total Receivables was $1,683.0 Mil. Revenue was 357 + 230 + 305 + 22 = $914.0 Mil. Gross Profit was 357 + 230 + 305 + 22 = $914.0 Mil. Total Current Assets was $0.0 Mil. Total Assets was $16,852.0 Mil. Property, Plant and Equipment(Net PPE) was $5,055.0 Mil. Depreciation, Depletion and Amortization(DDA) was $0.0 Mil. Selling, General, & Admin. Expense(SGA) was $278.0 Mil. Total Current Liabilities was $0.0 Mil. Long-Term Debt & Capital Lease Obligation was $1,677.0 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) |
= | (1765 / 846) | / | (1683 / 914) | |
= | 2.086288 | / | 1.841357 | |
= | 1.133 |
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) | |
= | (914 / 914) | / | (846 / 846) | |
= | 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 + 378) / 12088) | / | (1 - (0 + 5055) / 16852) | |
= | 0.968729 | / | 0.700036 | |
= | 1.3838 |
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 | |
= | 846 | / | 914 | |
= | 0.9256 |
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)) |
= | (0 / (0 + 5055)) | / | (0 / (0 + 378)) | |
= | 0 | / | 0 | |
= | 1 |
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) |
= | (205 / 846) | / | (278 / 914) | |
= | 0.242317 | / | 0.304158 | |
= | 0.7967 |
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) |
= | ((1696 + 0) / 12088) | / | ((1677 + 0) / 16852) | |
= | 0.140304 | / | 0.099513 | |
= | 1.4099 |
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 | |
= | (720 - 39 | - | 9) | / | 12088 | |
= | 0.055592 |
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.
Assured Guaranty has a M-score of -2.11 suggests that the company is unlikely to be a manipulator.
Thank you for viewing the detailed overview of Assured Guaranty's Beneish M-Score provided by GuruFocus.com. Please click on the following links to see related term pages.
Dominic Frederico | director, officer: Deputy Chairman/President/CEO | ACE LTD, ACE BLDG 30 WOODBOURNE AVE HAMILTON BER |
Robert Bailenson | officer: Chief Accounting Officer | ASSURED GUARANTY LTD., 30 WOODBOURNE AVENUE, HAMILTON D0 HM08 |
Laura Bieling | officer: Chief Accounting Officer* | 30 WOODBOURNE AVE., 5TH FLOOR, HAMILTON D0 D0 HM08 |
G Lawrence Buhl | director | 30 WOODBOURNE AVE, C/O ASSURED GUARANTY LTD, HAMILTON BERMUDA D0 0000 |
Stephen Donnarumma | officer: Chief Credit Officer | 30 WOODOURNE AVENUE, HAMILTON D0 HM08 |
Jorge A. Gana | officer: Chief Risk Officer | 30 WOODBOURNE AVE, 5TH FLOOR, HAMILTON D0 D0 HM08 |
Howard Albert | officer: Chief Risk Officer | 31 WEST 52ND STREET, NEW YORK NY 10019 |
David A. Buzen | officer: Head of Asset Management* | 850 3RD AVENUE, NEW YORK NY 10022 |
Holly Horn | officer: Chief Surveillance Officer | 30 WOODBOURNE AVE, 5TH FLOOR, HAMILTON D0 D0 HM08 |
Brewer Russell B. Ii | officer: Chief Surveillance Officer | 31 WEST 52ND STREET, NEW YORK NY 10019 |
Shea Courtney C. | director | 1555 N. ASTOR STREET, APARTMENT 9W, CHICAGO IL 60610 |
Michelle Mccloskey | director | C/O ALLIANCEBERNSTEIN LP, 9TH FLOOR, NEW YORK NY 10105 |
Lorin Radtke | director | 30 WOODBOURNE AVE, 5TH FLOOR, HAMILTON D0 D0 HM08 |
Thomas W Jones | director | ALTRIA GROUP INC, 6601 WEST BROAD STREET, RICHMOND VA 23230 |
Andrew T Feldstein | officer: Chief Investment Officer | 280 PARK AVENUE, 5TH FLOOR EAST, NEW YORK NY 10017 |
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