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GuruFocus has detected 3 Warning Signs with First Majestic Silver Corp $AG.
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First Majestic Silver Corp (NYSE:AG)
Beneish M-Score
-83.66 (As of Today)

The zones of discrimination for M-Score is as such:

An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.

First Majestic Silver Corp has a M-score of 5.64 signals that the company is a manipulator.

AG' s Beneish M-Score Range Over the Past 10 Years
Min: -10000000   Max: -1.76
Current: -83.66

-10000000
-1.76

During the past 13 years, the highest Beneish M-Score of First Majestic Silver Corp was -1.76. The lowest was -10000000.00. And the median was -3.15.


Definition

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (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 First Majestic Silver Corp 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 * 1.5431+0.528 * 2.1574+0.404 * 1.1914+0.892 * 1.2672+0.115 * 59.2371
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.785+4.679 * -0.0296-0.327 * 0.7105
=5.64

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $6.4 Mil.
Revenue was 66.17 + 79.326 + 66.072 + 66.509 = $278.1 Mil.
Gross Profit was -50.769 + 40.905 + 29.82 + 29.247 = $49.2 Mil.
Total Current Assets was $180.2 Mil.
Total Assets was $857.2 Mil.
Property, Plant and Equipment(Net PPE) was $628.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.1 Mil.
Selling, General & Admin. Expense(SGA) was $21.0 Mil.
Total Current Liabilities was $49.6 Mil.
Long-Term Debt was $33.7 Mil.
Net Income was 1.814 + 8.115 + 6.105 + -7.433 = $8.6 Mil.
Non Operating Income was -6.561 + 0.981 + 3.445 + -0.879 = $-3.0 Mil.
Cash Flow from Operations was 0 + 0 + 14.881 + 22.108 = $37.0 Mil.
Accounts Receivable was $3.2 Mil.
Revenue was 66.012 + 44.673 + 54.19 + 54.569 = $219.4 Mil.
Gross Profit was 26.533 + 14.128 + 20.876 + 22.233 = $83.8 Mil.
Total Current Assets was $104.8 Mil.
Total Assets was $789.7 Mil.
Property, Plant and Equipment(Net PPE) was $647.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $75.8 Mil.
Selling, General & Admin. Expense(SGA) was $21.1 Mil.
Total Current Liabilities was $89.2 Mil.
Long-Term Debt was $18.7 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in 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)
=(6.353 / 278.077) / (3.249 / 219.444)
=0.02284619 / 0.0148056
=1.5431

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)
=(83.77 / 219.444) / (49.203 / 278.077)
=0.38173748 / 0.1769402
=2.1574

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 plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (180.199 + 628.047) / 857.175) / (1 - (104.785 + 647.078) / 789.7)
=0.05708169 / 0.04791313
=1.1914

4. SGI = Sales Growth Index

Ratio of sales 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
=278.077 / 219.444
=1.2672

5. DEPI = Depreciation Index

Measured as the ratio of the rate of depreciation 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))
=(75.822 / (75.822 + 647.078)) / (1.114 / (1.114 + 628.047))
=0.10488588 / 0.00177061
=59.2371

6. SGAI = Sales, General and Administrative expenses Index

The ratio of SGA expenses 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)
=(21.036 / 278.077) / (21.146 / 219.444)
=0.07564811 / 0.09636171
=0.785

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$sgai= in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((33.668 + 49.572) / 857.175) / ((18.74 + 89.201) / 789.7)
=0.09710969 / 0.13668608
=0.7105

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
=(8.601 - -3.014 - 36.989) / 857.175
=-0.0296

An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.

First Majestic Silver Corp has a M-score of 5.64 signals that the company is likely to be a manipulator.


Related Terms

Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

First Majestic Silver Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.60910.76540.63771.09561.05161.32990.61590.67321.5431
GMI 2.19360.54560.52420.8131.07471.25491.4620.96722.1574
AQI 1.23951.99321.24451.99341.35950.11451.23315.87651.1914
SGI 0.84031.56052.07462.08231.00681.01670.97680.8941.2672
DEPI 1.70961.14920.53570.96181.2390.74880.6880.77660.9247
SGAI 0.64541.12390.66040.70621.46931.17680.68660.90920.7983
LVGI 1.0960.39541.01221.33431.0331.29191.07021.12550.7105
TATA -0.0421-0.0044-0.0995-0.0517-0.0658-0.2078-0.2238-0.2009-0.1058
M-score -2.34-1.86-2.47-1.43-2.61-3.51-3.57-1.91-1.43

First Majestic Silver Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.71310.61590.68590.99860.64320.67320.6770.69011.5431
GMI 1.51171.4621.39551.27681.03960.96720.89940.87362.1574
AQI 0.13541.23311.58291.1821.03745.87655.2066.33311.1914
SGI 0.8810.97680.94070.82810.97380.8940.98571.09571.2672
DEPI 0.76910.6880.70180.72820.72820.77660.78670.783859.2371
SGAI 0.87020.68660.74810.83880.69860.90920.84290.81320.785
LVGI 1.22791.07021.25551.31921.19591.12550.92810.82530.7105
TATA -0.1838-0.2205-0.2149-0.2-0.2063-0.2034-0.2271-0.2042-0.0296
M-score -3.87-3.55-3.46-3.46-3.80-1.93-2.18-1.485.64
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