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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 -2.52 no higher than -1.78, which implies that the company is unlikely to be a manipulator.
The historical rank and industry rank for Home BancShares's Beneish M-Score or its related term are showing as below:
During the past 13 years, the highest Beneish M-Score of Home BancShares was -1.61. The lowest was -2.99. And the median was -2.38.
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 Home BancShares 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 * 1.1905 | + | 0.528 * 1 | + | 0.404 * 1.0008 | + | 0.892 * 0.9731 | + | 0.115 * 1.0862 | |
- | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI | |||||||
- | 0.172 * 1.0567 | + | 4.679 * -0.00084 | - | 0.327 * 1.5744 | |||||||
= | -2.52 |
* 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 (Mar24) TTM: | Last Year (Mar23) TTM: |
Total Receivables was $119.0 Mil. Revenue was 242.965 + 239.479 + 241.359 + 252.274 = $976.1 Mil. Gross Profit was 242.965 + 239.479 + 241.359 + 252.274 = $976.1 Mil. Total Current Assets was $0.0 Mil. Total Assets was $22,835.7 Mil. Property, Plant and Equipment(Net PPE) was $389.6 Mil. Depreciation, Depletion and Amortization(DDA) was $30.6 Mil. Selling, General, & Admin. Expense(SGA) was $292.4 Mil. Total Current Liabilities was $0.0 Mil. Long-Term Debt & Capital Lease Obligation was $1,740.7 Mil. Net Income was 100.109 + 86.243 + 98.453 + 105.271 = $390.1 Mil. Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil. Cash Flow from Operations was 147.543 + 115.497 + 99.117 + 47.108 = $409.3 Mil. |
Total Receivables was $102.7 Mil. Revenue was 245.149 + 266.124 + 252.174 + 239.589 = $1,003.0 Mil. Gross Profit was 245.149 + 266.124 + 252.174 + 239.589 = $1,003.0 Mil. Total Current Assets was $0.0 Mil. Total Assets was $22,518.3 Mil. Property, Plant and Equipment(Net PPE) was $402.1 Mil. Depreciation, Depletion and Amortization(DDA) was $34.5 Mil. Selling, General, & Admin. Expense(SGA) was $284.4 Mil. Total Current Liabilities was $0.0 Mil. Long-Term Debt & Capital Lease Obligation was $1,090.3 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) |
= | (119.029 / 976.077) | / | (102.74 / 1003.036) | |
= | 0.121946 | / | 0.102429 | |
= | 1.1905 |
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) | |
= | (1003.036 / 1003.036) | / | (976.077 / 976.077) | |
= | 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 + 389.618) / 22835.721) | / | (1 - (0 + 402.094) / 22518.255) | |
= | 0.982938 | / | 0.982144 | |
= | 1.0008 |
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 | |
= | 976.077 | / | 1003.036 | |
= | 0.9731 |
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)) |
= | (34.486 / (34.486 + 402.094)) | / | (30.557 / (30.557 + 389.618)) | |
= | 0.078991 | / | 0.072724 | |
= | 1.0862 |
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) |
= | (292.44 / 976.077) | / | (284.394 / 1003.036) | |
= | 0.299608 | / | 0.283533 | |
= | 1.0567 |
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) |
= | ((1740.738 + 0) / 22835.721) | / | ((1090.275 + 0) / 22518.255) | |
= | 0.076229 | / | 0.048417 | |
= | 1.5744 |
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 | |
= | (390.076 - 0 | - | 409.265) | / | 22835.721 | |
= | -0.00084 |
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.
Home BancShares has a M-score of -2.52 suggests that the company is unlikely to be a manipulator.
Thank you for viewing the detailed overview of Home BancShares's Beneish M-Score provided by GuruFocus.com. Please click on the following links to see related term pages.
James Pat Hickman | director | P.O. BOX 966, CONWAY AR 72033 |
Adcock Robert H Jr | director | P O BOX 966, CONWAY AR 72033 |
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Carter Russell Davis Iii | officer: Executive Vice President | 15 GETTYSBURG SOUTH, CABOT AR 72023 |
Williamson Kenneth Mikel Jr | officer: Centennial Bank Regional Pres. | P.O. BOX 966, CONWAY AR 72033 |
Larry W Ross | director | P.O. BOX 966, CONWAY AR 72033 |
Richard H Ashley | director | 2851 LAKEWOOD VILLAGE DR., NORTH LITTLE ROCK AR 72116 |
Brian Davis | director, officer: Chief Financial Officer | 6 GATEWOOD CV, LITTLE ROCK AR 72206 |
Jim Rankin | director | P.O. BOX 966, CONWAY AR 72033 |
Alex R Lieblong | director | 210 E. ELM STREET, P. O. BOX 7200, EL DORADO AR 71730 |
John Stephen Tipton | officer: Chief Operating Officer | P.O. BOX 966, CONWAY AR 72033 |
Jack Engelkes | director | P O BOX 1167, CONWAY AR 72032 |
Jennifer C. Floyd | officer: Chief Accounting Officer | P.O. BOX 966, CONWAY AR 72033 |
John W Allison | director, officer: Chairman | |
James G Hinkle | director | P.O. BOX 1228, MOUNTAIN VIEW AR 72560 |
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