Banco BBVA Argentina Beneish M-Score Calculation
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski 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 Banco BBVA Argentina 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 * 0.5981 | + | 0.528 * 1 | + | 0.404 * 1.311 | + | 0.892 * 0.7313 | + | 0.115 * 1.1847 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 0.7476 | + | 4.679 * -0.089282 | - | 0.327 * 1.451 |
| = | -3.46 |
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
| This Year (Dec23) TTM: | Last Year (Dec22) TTM: |
Total Receivables was $290 Mil.
Revenue was 2902.404 + 876.105 + 946.746 + 780.449 = $5,506 Mil.
Gross Profit was 2902.404 + 876.105 + 946.746 + 780.449 = $5,506 Mil.
Total Current Assets was $5,793 Mil.
Total Assets was $16,926 Mil.
Property, Plant and Equipment(Net PPE) was $826 Mil.
Depreciation, Depletion and Amortization(DDA) was $90 Mil.
Selling, General, & Admin. Expense(SGA) was $1,303 Mil.
Total Current Liabilities was $989 Mil.
Long-Term Debt & Capital Lease Obligation was $175 Mil.
Net Income was 226.102 + 27.52 + 125.242 + 76.076 = $455 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 994.31 + 250.25 + 286.754 + 434.764 = $1,966 Mil.
|
Total Receivables was $662 Mil.
Revenue was 3640.808 + 1627.861 + 1234.754 + 1025.479 = $7,529 Mil.
Gross Profit was 3640.808 + 1627.861 + 1234.754 + 1025.479 = $7,529 Mil.
Total Current Assets was $17,631 Mil.
Total Assets was $36,257 Mil.
Property, Plant and Equipment(Net PPE) was $1,785 Mil.
Depreciation, Depletion and Amortization(DDA) was $234 Mil.
Selling, General, & Admin. Expense(SGA) was $2,384 Mil.
Total Current Liabilities was $1,277 Mil.
Long-Term Debt & Capital Lease Obligation was $442 Mil.
|
1. DSRI = Days Sales in Receivables Index
Measured as the ratio of Revenue in Total 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) |
| = | (289.595 / 5505.704) | / | (662.102 / 7528.902) |
| = | 0.052599 | / | 0.087941 |
| | = | 0.5981 |
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) |
| = | (7528.902 / 7528.902) | / | (5505.704 / 5505.704) |
| = | 1 | / | 1 |
| | = | 1 |
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 Property, Plant and Equipment to Total Assets.
| AQI | = | (1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) | / | (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1) |
| = | (1 - (5792.501 + 826.088) / 16925.508) | / | (1 - (17630.758 + 1785.116) / 36256.826) |
| = | 0.608958 | / | 0.464491 |
| | = | 1.311 |
4. SGI = Sales Growth Index
Ratio of Revenue 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 |
| = | 5505.704 | / | 7528.902 |
| | = | 0.7313 |
5. DEPI = Depreciation Index
Measured as the ratio of the rate of Depreciation, Depletion and Amortization 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)) |
| = | (234.229 / (234.229 + 1785.116)) | / | (89.66 / (89.66 + 826.088)) |
| = | 0.115993 | / | 0.097909 |
| | = | 1.1847 |
Note: If the Depreciation, Depletion and Amortization data is not available, we assume that the depreciation rate is constant and set the Depreciation Index to 1.
6. SGAI = Sales, General and Administrative expenses Index
The ratio of Selling, General, & Admin. Expense(SGA) to Sales 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) |
| = | (1303.31 / 5505.704) | / | (2383.937 / 7528.902) |
| = | 0.23672 | / | 0.316638 |
| | = | 0.7476 |
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 in leverage
| LVGI | = | ((LTD_t + CurrentLiabilities_t) / TotalAssets_t) | / | ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1) |
| = | ((175.023 + 989.201) / 16925.508) | / | ((441.966 + 1276.789) / 36256.826) |
| = | 0.068785 | / | 0.047405 |
| | = | 1.451 |
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 |
| = | (454.94 - 0 | - | 1966.078) | / | 16925.508 |
| | = | -0.089282 |
An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator. An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.
Banco BBVA Argentina has a M-score of -3.46 suggests that the company is unlikely to be a manipulator.
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