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GuruFocus has detected 2 Warning Signs with Anglogold Ashanti Ltd $AU.
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Anglogold Ashanti Ltd (NYSE:AU)
Beneish M-Score
-1.68 (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.

Anglogold Ashanti Ltd has a M-score of -1.56 signals that the company is a manipulator.

AU' s Beneish M-Score Range Over the Past 10 Years
Min: -3.72   Max: -1.29
Current: -1.68

-3.72
-1.29

During the past 13 years, the highest Beneish M-Score of Anglogold Ashanti Ltd was -1.29. The lowest was -3.72. And the median was -2.38.


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 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 * 0.9515+0.528 * 3.4256+0.404 * 1.1774+0.892 * 0.8631+0.115 * 1.2607
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.6123+4.679 * -0.0927-0.327 * 0.7914
=-1.56

* 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 (Jun15) TTM:
Accounts Receivable was $170 Mil.
Revenue was 1156 + 940 + 1020 + 945 = $4,061 Mil.
Gross Profit was -319 + 221 + 208 + 115 = $225 Mil.
Total Current Assets was $1,166 Mil.
Total Assets was $7,153 Mil.
Property, Plant and Equipment(Net PPE) was $4,111 Mil.
Depreciation, Depletion and Amortization(DDA) was $556 Mil.
Selling, General & Admin. Expense(SGA) was $65 Mil.
Total Current Liabilities was $760 Mil.
Long-Term Debt was $2,144 Mil.
Net Income was 395 + -78 + 130 + -72 = $375 Mil.
Non Operating Income was 255 + -126 + 26 + 128 = $283 Mil.
Cash Flow from Operations was -104 + 223 + 375 + 261 = $755 Mil.
Accounts Receivable was $207 Mil.
Revenue was 1018 + 1079 + 1283 + 1325 = $4,705 Mil.
Gross Profit was 188 + 209 + 223 + 273 = $893 Mil.
Total Current Assets was $2,400 Mil.
Total Assets was $8,817 Mil.
Property, Plant and Equipment(Net PPE) was $4,453 Mil.
Depreciation, Depletion and Amortization(DDA) was $787 Mil.
Selling, General & Admin. Expense(SGA) was $123 Mil.
Total Current Liabilities was $872 Mil.
Long-Term Debt was $3,651 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)
=(170 / 4061) / (207 / 4705)
=0.04186161 / 0.04399575
=0.9515

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)
=(893 / 4705) / (225 / 4061)
=0.18979809 / 0.05540507
=3.4256

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 - (1166 + 4111) / 7153) / (1 - (2400 + 4453) / 8817)
=0.26226758 / 0.2227515
=1.1774

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
=4061 / 4705
=0.8631

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))
=(787 / (787 + 4453)) / (556 / (556 + 4111))
=0.15019084 / 0.11913435
=1.2607

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)
=(65 / 4061) / (123 / 4705)
=0.01600591 / 0.0261424
=0.6123

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)
=((2144 + 760) / 7153) / ((3651 + 872) / 8817)
=0.4059835 / 0.51298628
=0.7914

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
=(375 - 283 - 755) / 7153
=-0.0927

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 -1.56 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.

Anglogold Ashanti Ltd Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.76760.92461.08850.86210.70592.33613.27220.86270.86861.0442
GMI 1.28610.82651.02730.8020.92231.1471.71971.29671.11880.8693
AQI 0.50330.69541.50071.61560.62241.20351.50551.07260.89721.0183
SGI 1.141.20521.06011.36621.22950.96780.86980.9360.76591.024
DEPI 1.4030.88411.1140.82271.0561.1340.63561.02290.86580.9773
SGAI 0.59571.29010.69821.70351.05041.00670.46970.64851.01670.9972
LVGI 1.24670.8851.05560.71980.87361.18511.40040.97490.93560.8843
TATA -0.04690.03830.037-0.0072-0.1155-0.0783-0.3763-0.1304-0.1991-0.1606
M-score -2.80-2.43-1.91-2.22-3.24-1.53-1.76-3.02-3.72-3.20

Anglogold Ashanti Ltd Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Jun16Dec16
DSRI 4.62468.95996.23020.86340.75560.67180.81550.85951.16380.9515
GMI 2.29772.13561.24141.11970.94180.87810.98021.12231.02523.4256
AQI 1.12491.21561.24191.07260.94370.80220.89350.89720.99931.1774
SGI 0.88350.9240.9630.93510.9160.86550.79780.7740.78410.8631
DEPI 0.74240.97460.86431.01960.94810.87330.81370.8630.92231.2607
SGAI 0.19610.11940.09690.82211.55213.08935.01360.98740.79980.6123
LVGI 1.37831.08881.06870.97491.00241.05491.01770.93560.88360.7914
TATA -0.4411-0.233-0.2391-0.1275-0.1223-0.1371-0.1769-0.1852-0.1828-0.0927
M-score -0.594.491.52-3.13-3.51-4.08-4.43-3.65-3.30-1.56
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