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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 2.95. The lowest was -4.11. And the median was -2.53.
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 * 0.823||+||0.528 * 1.1351||+||0.404 * 0.8972||+||0.892 * 0.8084||+||0.115 * 0.8592|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8488||+||4.679 * -0.1852||-||0.327 * 0.9356|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $159 Mil.|
Revenue was 1020 + 945 + 1018 + 1079 = $4,062 Mil.
Gross Profit was 208 + 115 + 188 + 209 = $720 Mil.
Total Current Assets was $1,350 Mil.
Total Assets was $7,284 Mil.
Property, Plant and Equipment(Net PPE) was $4,058 Mil.
Depreciation, Depletion and Amortization(DDA) was $780 Mil.
Selling, General & Admin. Expense(SGA) was $94 Mil.
Total Current Liabilities was $707 Mil.
Long-Term Debt was $2,637 Mil.
Net Income was 130 + -72 + -142 + -1 = $-85 Mil.
Non Operating Income was 26 + 128 + -13 + -26 = $115 Mil.
Cash Flow from Operations was 375 + 261 + 323 + 190 = $1,149 Mil.
|Accounts Receivable was $239 Mil.
Revenue was 1217 + 1254 + 1246 + 1308 = $5,025 Mil.
Gross Profit was 219 + 255 + 241 + 296 = $1,011 Mil.
Total Current Assets was $1,649 Mil.
Total Assets was $9,134 Mil.
Property, Plant and Equipment(Net PPE) was $4,863 Mil.
Depreciation, Depletion and Amortization(DDA) was $782 Mil.
Selling, General & Admin. Expense(SGA) was $137 Mil.
Total Current Liabilities was $984 Mil.
Long-Term Debt was $3,498 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)|
|=||(159 / 4062)||/||(239 / 5025)|
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)|
|=||(1011 / 5025)||/||(720 / 4062)|
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 - (1350 + 4058) / 7284)||/||(1 - (1649 + 4863) / 9134)|
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))|
|=||(782 / (782 + 4863))||/||(780 / (780 + 4058))|
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)|
|=||(94 / 4062)||/||(137 / 5025)|
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)|
|=||((2637 + 707) / 7284)||/||((3498 + 984) / 9134)|
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|
|=||(-85 - 115||-||1149)||/||7284|
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 -3.62 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