McGrath (ASX:MEA) Beneish M-Score : -2.31 (As of May. 10, 2024)

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What is McGrath Beneish M-Score?

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 -2.31 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

The historical rank and industry rank for McGrath's Beneish M-Score or its related term are showing as below:

ASX:MEA' s Beneish M-Score Range Over the Past 10 Years
Min: -4.05 Med: -3.3 Max: -2.31
Current: -2.31

During the past 8 years, the highest Beneish M-Score of McGrath was -2.31. The lowest was -4.05. And the median was -3.30.

McGrath Beneish M-Score Historical Data

The historical data trend for McGrath's Beneish M-Score can be seen below:

* 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.

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McGrath Beneish M-Score Chart

McGrath Annual Data

Trend

Jun16

Jun17

Jun18

Jun19

Jun20

Jun21

Jun22

Jun23

Beneish M-Score

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-3.84

-4.05

-2.76

-3.24

-2.31

McGrath Semi-Annual Data
	Dec15	Jun16	Dec16	Jun17	Dec17	Jun18	Dec18	Jun19	Dec19	Jun20	Dec20	Jun21	Dec21	Jun22	Dec22	Jun23	Dec23
Beneish M-Score	Get a 7-Day Free Trial												-	-3.24	-	-2.31	-

Competitive Comparison of McGrath's Beneish M-Score

For the Real Estate Services subindustry, McGrath's Beneish M-Score, along with its competitors' market caps and Beneish M-Score data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

McGrath's Beneish M-Score Distribution in the Real Estate Industry

For the Real Estate industry and Real Estate sector, McGrath's Beneish M-Score distribution charts can be found below:

* The bar in red indicates where McGrath's Beneish M-Score falls into.

McGrath 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 McGrath for today is based on a combination of the following eight different indices:

-4.84

0.92 * DSRI

0.528 * GMI

0.404 * AQI

0.892 * SGI

0.115 * DEPI

-4.84

0.92 * 1.5071

0.528 * 0.9984

0.404 * 1.0147

0.892 * 0.734

0.115 * 0.7535

0.172 * SGAI

4.679 * TATA

0.327 * LVGI

0.172 * 1.1888

4.679 * -0.019305

0.327 * 0.7461

-2.31

This Year (Jun23) TTM:

Last Year (Jun22) TTM:

Total Receivables was A$15.38 Mil.
Revenue was A$82.51 Mil.
Gross Profit was A$49.72 Mil.
Total Current Assets was A$49.83 Mil.
Total Assets was A$81.84 Mil.
Property, Plant and Equipment(Net PPE) was A$9.46 Mil.
Depreciation, Depletion and Amortization(DDA) was A$7.69 Mil.
Selling, General, & Admin. Expense(SGA) was A$27.96 Mil.
Total Current Liabilities was A$19.94 Mil.
Long-Term Debt & Capital Lease Obligation was A$6.37 Mil.
Net Income was A$6.20 Mil.
Gross Profit was A$5.42 Mil.
Cash Flow from Operations was A$2.36 Mil.

Total Receivables was A$13.90 Mil.
Revenue was A$112.42 Mil.
Gross Profit was A$67.63 Mil.
Total Current Assets was A$51.53 Mil.
Total Assets was A$92.99 Mil.
Property, Plant and Equipment(Net PPE) was A$16.21 Mil.
Depreciation, Depletion and Amortization(DDA) was A$8.27 Mil.
Selling, General, & Admin. Expense(SGA) was A$32.04 Mil.
Total Current Liabilities was A$28.47 Mil.
Long-Term Debt & Capital Lease Obligation was A$11.59 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)
	=	(15.38 / 82.51)	/	(13.904 / 112.417)
	=	0.186402	/	0.123682
	=	1.5071

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)
	=	(67.634 / 112.417)	/	(49.718 / 82.51)
	=	0.601635	/	0.602569
	=	0.9984

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 - (49.831 + 9.461) / 81.844)	/	(1 - (51.531 + 16.207) / 92.99)
	=	0.275549	/	0.271556
	=	1.0147

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
	=	82.51	/	112.417
	=	0.734

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))
	=	(8.271 / (8.271 + 16.207))	/	(7.692 / (7.692 + 9.461))
	=	0.337895	/	0.448435
	=	0.7535

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)
	=	(27.957 / 82.51)	/	(32.042 / 112.417)
	=	0.338832	/	0.285028
	=	1.1888

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)
	=	((6.368 + 19.937) / 81.844)	/	((11.593 + 28.467) / 92.99)
	=	0.321404	/	0.430799
	=	0.7461

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
	=	(6.197 - 5.422	-	2.355)	/	81.844
	=	-0.019305

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.

McGrath has a M-score of -2.31 suggests that the company is unlikely to be a manipulator.

McGrath Beneish M-Score Related Terms

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McGrath (ASX:MEA) Business Description

Industry

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Comparable Companies

Traded in Other Exchanges

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Address

55 Pyrmont Street, Pyrmont, NSW, AUS, 2009

Website

https://www.mcgrath.com.au

McGrath Ltd is a real estate company. It provides a range of services including residential property sales, property management, mortgage broking, auction services, and career training. It operates in the following segments: Company owned sales; Company owned property management; Franchise services; and Other. Geographically, all the business activities of the group function through Australia. The majority of its revenue gets derived from Company owned sales segment that comprises company-owned sales offices for which McGrath earns sales commission revenue including property marketing fees paid by vendor clients.

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