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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 BGC Partners Inc was 4.35. The lowest was -4.70. And the median was -2.60.
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 BGC Partners Inc 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 * 0.8558||+||0.528 * 1||+||0.404 * 2.2881||+||0.892 * 1.3864||+||0.115 * 0.8461|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.985||+||4.679 * -0.0705||-||0.327 * 1.0133|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $1,723 Mil.|
Revenue was 685.295 + 669.131 + 547.567 + 489.283 = $2,391 Mil.
Gross Profit was 685.295 + 669.131 + 547.567 + 489.283 = $2,391 Mil.
Total Current Assets was $2,297 Mil.
Total Assets was $4,118 Mil.
Property, Plant and Equipment(Net PPE) was $151 Mil.
Depreciation, Depletion and Amortization(DDA) was $74 Mil.
Selling, General & Admin. Expense(SGA) was $2,183 Mil.
Total Current Liabilities was $2,240 Mil.
Long-Term Debt was $841 Mil.
Net Income was 38.371 + 9.347 + 14.055 + -18.685 = $43 Mil.
Non Operating Income was 63.487 + 3.058 + 32.561 + 5.015 = $104 Mil.
Cash Flow from Operations was 133.247 + 56.657 + -63.344 + 102.718 = $229 Mil.
|Accounts Receivable was $1,452 Mil.
Revenue was 436.216 + 417.202 + 444.789 + 426.605 = $1,725 Mil.
Gross Profit was 436.216 + 417.202 + 444.789 + 426.605 = $1,725 Mil.
Total Current Assets was $2,094 Mil.
Total Assets was $2,684 Mil.
Property, Plant and Equipment(Net PPE) was $114 Mil.
Depreciation, Depletion and Amortization(DDA) was $44 Mil.
Selling, General & Admin. Expense(SGA) was $1,599 Mil.
Total Current Liabilities was $1,572 Mil.
Long-Term Debt was $410 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)|
|=||(1723.105 / 2391.276)||/||(1452.253 / 1724.812)|
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)|
|=||(669.131 / 1724.812)||/||(685.295 / 2391.276)|
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 - (2297.047 + 150.679) / 4117.846)||/||(1 - (2093.699 + 114.367) / 2683.787)|
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))|
|=||(44.404 / (44.404 + 114.367))||/||(74.404 / (74.404 + 150.679))|
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)|
|=||(2183.238 / 2391.276)||/||(1598.756 / 1724.812)|
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)|
|=||((841.042 + 2240.284) / 4117.846)||/||((410.348 + 1571.589) / 2683.787)|
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|
|=||(43.088 - 104.121||-||229.278)||/||4117.846|
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.
BGC Partners Inc has a M-score of -2.10 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
BGC Partners Inc Annual Data
BGC Partners Inc Quarterly Data