Velocity Composites (LSE:VEL) Beneish M-Score : -1.36 (As of May. 09, 2024)

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What is Velocity Composites 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.

Warning Sign:

Beneish M-Score -1.36 higher than -1.78, which implies that the company might have manipulated its financial results.

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

LSE:VEL' s Beneish M-Score Range Over the Past 10 Years
Min: -4.12 Med: -2.92 Max: -1.36
Current: -1.36

During the past 10 years, the highest Beneish M-Score of Velocity Composites was -1.36. The lowest was -4.12. And the median was -2.92.

Velocity Composites Beneish M-Score Historical Data

The historical data trend for Velocity Composites'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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Velocity Composites Beneish M-Score Chart

Velocity Composites Annual Data

Trend

Oct14

Oct15

Oct16

Oct17

Oct18

Oct19

Oct20

Oct21

Oct22

Oct23

Beneish M-Score

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-2.88

-4.12

-3.81

-2.69

-1.36

Velocity Composites Semi-Annual Data
	Oct14	Oct15	Oct16	Apr17	Oct17	Apr18	Oct18	Apr19	Oct19	Apr20	Oct20	Apr21	Oct21	Apr22	Oct22	Apr23	Oct23
Beneish M-Score	Get a 7-Day Free Trial												-3.81	-	-2.69	-	-1.36

Competitive Comparison of Velocity Composites's Beneish M-Score

For the Aerospace & Defense subindustry, Velocity Composites'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.

Velocity Composites's Beneish M-Score Distribution in the Aerospace & Defense Industry

For the Aerospace & Defense industry and Industrials sector, Velocity Composites's Beneish M-Score distribution charts can be found below:

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

Velocity Composites 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 Velocity Composites 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 * 1.0687

0.528 * 1.2211

0.404 * 3.4337

0.892 * 1.3723

0.115 * 0.9875

0.172 * SGAI

4.679 * TATA

0.327 * LVGI

0.172 * 1.0372

4.679 * -0.089172

0.327 * 0.8466

-1.36

This Year (Oct23) TTM:

Last Year (Oct22) TTM:

Total Receivables was £3.28 Mil.
Revenue was £16.41 Mil.
Gross Profit was £3.09 Mil.
Total Current Assets was £9.59 Mil.
Total Assets was £14.70 Mil.
Property, Plant and Equipment(Net PPE) was £4.22 Mil.
Depreciation, Depletion and Amortization(DDA) was £0.89 Mil.
Selling, General, & Admin. Expense(SGA) was £5.78 Mil.
Total Current Liabilities was £5.58 Mil.
Long-Term Debt & Capital Lease Obligation was £2.56 Mil.
Net Income was £-3.14 Mil.
Gross Profit was £0.00 Mil.
Cash Flow from Operations was £-1.83 Mil.

Total Receivables was £2.24 Mil.
Revenue was £11.96 Mil.
Gross Profit was £2.75 Mil.
Total Current Assets was £6.27 Mil.
Total Assets was £9.81 Mil.
Property, Plant and Equipment(Net PPE) was £3.37 Mil.
Depreciation, Depletion and Amortization(DDA) was £0.70 Mil.
Selling, General, & Admin. Expense(SGA) was £4.06 Mil.
Total Current Liabilities was £3.12 Mil.
Long-Term Debt & Capital Lease Obligation was £3.30 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)
	=	(3.282 / 16.411)	/	(2.238 / 11.959)
	=	0.199988	/	0.187139
	=	1.0687

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)
	=	(2.746 / 11.959)	/	(3.086 / 16.411)
	=	0.229618	/	0.188045
	=	1.2211

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 - (9.588 + 4.224) / 14.702)	/	(1 - (6.272 + 3.368) / 9.813)
	=	0.060536	/	0.01763
	=	3.4337

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
	=	16.411	/	11.959
	=	1.3723

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))
	=	(0.695 / (0.695 + 3.368))	/	(0.885 / (0.885 + 4.224))
	=	0.171056	/	0.173224
	=	0.9875

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)
	=	(5.783 / 16.411)	/	(4.063 / 11.959)
	=	0.352386	/	0.339744
	=	1.0372

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)
	=	((2.557 + 5.577) / 14.702)	/	((3.298 + 3.115) / 9.813)
	=	0.553258	/	0.653521
	=	0.8466

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
	=	(-3.143 - 0	-	-1.832)	/	14.702
	=	-0.089172

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.

Velocity Composites has a M-score of -1.36 signals that the company is likely to be a manipulator.

Velocity Composites Beneish M-Score Related Terms

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Velocity Composites (LSE:VEL) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Aerospace & Defense » Velocity Composites PLC (LSE:VEL) » Definitions » Beneish M-Score

Comparable Companies

Traded in Other Exchanges

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Address

Billington Road, AMS Technology Park, Burnley, Lancashire, GBR, BB11 5UB

Website

https://www.velocity-composites.com

Velocity Composites PLC is a provider of engineered composite material kits to the aerospace industry. The company has operational functions across Europe, the UK, and the rest of the world. It generates maximum revenue from the United Kingdom. It offers Structural Pre-preg Kits, Engineered Vacuum Bag Material Kits, Honeycomb, Core Potting Compounds, Co-bonded Materials, Process & Tooling Aids, and Engineering Support Services. Revenue arises mainly from the sale of structural and consumable materials for use within the aerospace industry.