The Goldmanchs Group 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 The Goldmanchs Group 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 * 1.0492 | + | 0.528 * 1 | + | 0.404 * 1.0047 | + | 0.892 * 1.0419 | + | 0.115 * 0.5103 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 1.0042 | + | 4.679 * 0.035168 | - | 0.327 * 0.8809 |
| = | -2.25 |
* 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 C$238,449 Mil.
Revenue was 19238.717 + 15184.229 + 15989.583 + 14475.097 = C$64,888 Mil.
Gross Profit was 19238.717 + 15184.229 + 15989.583 + 14475.097 = C$64,888 Mil.
Total Current Assets was C$0 Mil.
Total Assets was C$2,299,008 Mil.
Property, Plant and Equipment(Net PPE) was C$17,049 Mil.
Depreciation, Depletion and Amortization(DDA) was C$6,059 Mil.
Selling, General, & Admin. Expense(SGA) was C$22,334 Mil.
Total Current Liabilities was C$0 Mil.
Long-Term Debt & Capital Lease Obligation was C$329,067 Mil.
Net Income was 5593.075 + 2693.933 + 2784.68 + 1615.578 = C$12,687 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = C$0 Mil.
Cash Flow from Operations was -37952.237 + -38045.093 + -34550.055 + 42383.669 = C$-68,164 Mil.
|
Total Receivables was C$218,137 Mil.
Revenue was 16726.099 + 14390.59 + 15973.453 + 15190.666 = C$62,281 Mil.
Gross Profit was 16726.099 + 14390.59 + 15973.453 + 15190.666 = C$62,281 Mil.
Total Current Assets was C$0 Mil.
Total Assets was C$2,104,923 Mil.
Property, Plant and Equipment(Net PPE) was C$25,463 Mil.
Depreciation, Depletion and Amortization(DDA) was C$3,933 Mil.
Selling, General, & Admin. Expense(SGA) was C$21,346 Mil.
Total Current Liabilities was C$0 Mil.
Long-Term Debt & Capital Lease Obligation was C$342,013 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) |
| = | (238448.822 / 64887.626) | / | (218137.123 / 62280.808) |
| = | 3.674797 | / | 3.502477 |
| | = | 1.0492 |
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) |
| = | (62280.808 / 62280.808) | / | (64887.626 / 64887.626) |
| = | 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 + 17048.592) / 2299008.384) | / | (1 - (0 + 25462.695) / 2104922.937) |
| = | 0.992584 | / | 0.987903 |
| | = | 1.0047 |
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 |
| = | 64887.626 | / | 62280.808 |
| | = | 1.0419 |
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)) |
| = | (3933.085 / (3933.085 + 25462.695)) | / | (6058.83 / (6058.83 + 17048.592)) |
| = | 0.133798 | / | 0.262203 |
| | = | 0.5103 |
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) |
| = | (22333.563 / 64887.626) | / | (21345.987 / 62280.808) |
| = | 0.344188 | / | 0.342738 |
| | = | 1.0042 |
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) |
| = | ((329066.928 + 0) / 2299008.384) | / | ((342013.426 + 0) / 2104922.937) |
| = | 0.143134 | / | 0.162483 |
| | = | 0.8809 |
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 |
| = | (12687.266 - 0 | - | -68163.716) | / | 2299008.384 |
| | = | 0.035168 |
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.
The Goldmanchs Group has a M-score of -2.25 suggests that the company is unlikely to be a manipulator.
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