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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 -1.29. The lowest was -3.72. And the median was -2.38.
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|
|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
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)|
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)|
|=||(893 / 4705)||/||(225 / 4061)|
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 - (1166 + 4111) / 7153)||/||(1 - (2400 + 4453) / 8817)|
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))|
|=||(787 / (787 + 4453))||/||(556 / (556 + 4111))|
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)|
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)|
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|
|=||(375 - 283||-||755)||/||7153|
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.
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