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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 7.16. The lowest was -4.55. And the median was -2.54.
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 * 1.1156||+||0.528 * 1.0325||+||0.404 * 0.9993||+||0.892 * 0.818||+||0.115 * 0.9183|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.718||+||4.679 * -0.1828||-||0.327 * 0.8836|
|This Year (Jun16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $240 Mil.|
Revenue was 933 + 1027 + 945 + 1018 = $3,923 Mil.
Gross Profit was 221 + 208 + 115 + 188 = $732 Mil.
Total Current Assets was $1,406 Mil.
Total Assets was $7,433 Mil.
Property, Plant and Equipment(Net PPE) was $4,072 Mil.
Depreciation, Depletion and Amortization(DDA) was $755 Mil.
Selling, General & Admin. Expense(SGA) was $74 Mil.
Total Current Liabilities was $1,182 Mil.
Long-Term Debt was $2,046 Mil.
Net Income was -78 + 130 + -72 + -142 = $-162 Mil.
Non Operating Income was -126 + 26 + 128 + -13 = $15 Mil.
Cash Flow from Operations was 223 + 375 + 261 + 323 = $1,182 Mil.
|Accounts Receivable was $263 Mil.
Revenue was 1079 + 1217 + 1254 + 1246 = $4,796 Mil.
Gross Profit was 209 + 219 + 255 + 241 = $924 Mil.
Total Current Assets was $1,920 Mil.
Total Assets was $8,853 Mil.
Property, Plant and Equipment(Net PPE) was $4,603 Mil.
Depreciation, Depletion and Amortization(DDA) was $772 Mil.
Selling, General & Admin. Expense(SGA) was $126 Mil.
Total Current Liabilities was $880 Mil.
Long-Term Debt was $3,471 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)|
|=||(240 / 3923)||/||(263 / 4796)|
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)|
|=||(924 / 4796)||/||(732 / 3923)|
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 - (1406 + 4072) / 7433)||/||(1 - (1920 + 4603) / 8853)|
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))|
|=||(772 / (772 + 4603))||/||(755 / (755 + 4072))|
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)|
|=||(74 / 3923)||/||(126 / 4796)|
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)|
|=||((2046 + 1182) / 7433)||/||((3471 + 880) / 8853)|
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|
|=||(-162 - 15||-||1182)||/||7433|
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 -3.30 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