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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 12.97. The lowest was -4.13. And the median was -2.66.
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 * 0.8661||+||0.528 * 1.2983||+||0.404 * 1.0726||+||0.892 * 0.9387||+||0.115 * 1.024|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.5984||+||4.679 * -0.1275||-||0.327 * 0.9749|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $239 Mil.|
Revenue was 1283 + 1325 + 1316 + 1324 = $5,248 Mil.
Gross Profit was 223 + 273 + 252 + 296 = $1,044 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 $786 Mil.
Selling, General & Admin. Expense(SGA) was $123 Mil.
Total Current Liabilities was $984 Mil.
Long-Term Debt was $3,498 Mil.
Net Income was -58 + 41 + -80 + 39 = $-58 Mil.
Non Operating Income was 72 + 36 + -124 + -64 = $-80 Mil.
Cash Flow from Operations was 106 + 361 + 370 + 350 = $1,187 Mil.
|Accounts Receivable was $294 Mil.
Revenue was 1446 + 1340 + 1342 + 1463 = $5,591 Mil.
Gross Profit was 404 + 276 + 330 + 434 = $1,444 Mil.
Total Current Assets was $2,270 Mil.
Total Assets was $9,674 Mil.
Property, Plant and Equipment(Net PPE) was $4,815 Mil.
Depreciation, Depletion and Amortization(DDA) was $800 Mil.
Selling, General & Admin. Expense(SGA) was $219 Mil.
Total Current Liabilities was $1,236 Mil.
Long-Term Debt was $3,633 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)|
|=||(239 / 5248)||/||(294 / 5591)|
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)|
|=||(273 / 5591)||/||(223 / 5248)|
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 - (1649 + 4863) / 9134)||/||(1 - (2270 + 4815) / 9674)|
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))|
|=||(800 / (800 + 4815))||/||(786 / (786 + 4863))|
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)|
|=||(123 / 5248)||/||(219 / 5591)|
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)|
|=||((3498 + 984) / 9134)||/||((3633 + 1236) / 9674)|
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|
|=||(-58 - -80||-||1187)||/||9134|
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 -2.99 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