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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.
During the past 13 years, the highest Beneish M-Score of Anglogold Ashanti Ltd was 4.17. The lowest was -4.24. And the median was -2.47.
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 Anglogold Ashanti Ltd 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 * 0.7551||+||0.528 * 1.3195||+||0.404 * 0.8935||+||0.892 * 0.8616||+||0.115 * 0.8066|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9847||+||4.679 * -0.1794||-||0.327 * 1.0177|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $203 Mil.|
Revenue was 945 + 1018 + 1079 + 1485 = $4,527 Mil.
Gross Profit was 115 + 188 + 209 + 269 = $781 Mil.
Total Current Assets was $1,717 Mil.
Total Assets was $7,426 Mil.
Property, Plant and Equipment(Net PPE) was $3,836 Mil.
Depreciation, Depletion and Amortization(DDA) was $790 Mil.
Selling, General & Admin. Expense(SGA) was $112 Mil.
Total Current Liabilities was $983 Mil.
Long-Term Debt was $2,691 Mil.
Net Income was -72 + -142 + -1 + -58 = $-273 Mil.
Non Operating Income was 128 + -13 + -26 + 70 = $159 Mil.
Cash Flow from Operations was 261 + 323 + 190 + 126 = $900 Mil.
|Accounts Receivable was $312 Mil.
Revenue was 1254 + 1246 + 1308 + 1446 = $5,254 Mil.
Gross Profit was 255 + 241 + 296 + 404 = $1,196 Mil.
Total Current Assets was $1,843 Mil.
Total Assets was $9,310 Mil.
Property, Plant and Equipment(Net PPE) was $4,839 Mil.
Depreciation, Depletion and Amortization(DDA) was $773 Mil.
Selling, General & Admin. Expense(SGA) was $132 Mil.
Total Current Liabilities was $1,005 Mil.
Long-Term Debt was $3,521 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(203 / 4527)||/||(312 / 5254)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(188 / 5254)||/||(115 / 4527)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (1717 + 3836) / 7426)||/||(1 - (1843 + 4839) / 9310)|
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.
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))|
|=||(773 / (773 + 4839))||/||(790 / (790 + 3836))|
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)|
|=||(112 / 4527)||/||(132 / 5254)|
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)|
|=||((2691 + 983) / 7426)||/||((3521 + 1005) / 9310)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(-273 - 159||-||900)||/||7426|
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.
Anglogold Ashanti Ltd has a M-score of -3.57 suggests that the company will not be a manipulator.
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
Anglogold Ashanti Ltd Annual Data
Anglogold Ashanti Ltd Quarterly Data