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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 0.82. The lowest was -4.43. And the median was -2.65.
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 * 1.9146||+||0.528 * 1||+||0.404 * 1.3457||+||0.892 * 0.7239||+||0.115 * 0.9452|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0859||+||4.679 * -0.0813||-||0.327 * 1.2175|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $1,072 Mil.|
Revenue was 489.283 + 436.216 + 417.581 + 440.291 = $1,783 Mil.
Gross Profit was 489.283 + 436.216 + 417.581 + 440.291 = $1,783 Mil.
Total Current Assets was $1,973 Mil.
Total Assets was $2,751 Mil.
Property, Plant and Equipment(Net PPE) was $112 Mil.
Depreciation, Depletion and Amortization(DDA) was $45 Mil.
Selling, General & Admin. Expense(SGA) was $1,643 Mil.
Total Current Liabilities was $1,403 Mil.
Long-Term Debt was $707 Mil.
Net Income was -18.685 + 7.211 + 7.601 + 8.008 = $4 Mil.
Non Operating Income was 5.015 + 43.252 + -1.925 + -2.072 = $44 Mil.
Cash Flow from Operations was 102.718 + 51.667 + 29.094 + 0.064 = $184 Mil.
|Accounts Receivable was $774 Mil.
Revenue was 421.291 + 404.189 + 1193.167 + 444.969 = $2,464 Mil.
Gross Profit was 421.291 + 404.189 + 1193.167 + 444.969 = $2,464 Mil.
Total Current Assets was $1,578 Mil.
Total Assets was $2,079 Mil.
Property, Plant and Equipment(Net PPE) was $128 Mil.
Depreciation, Depletion and Amortization(DDA) was $47 Mil.
Selling, General & Admin. Expense(SGA) was $2,090 Mil.
Total Current Liabilities was $901 Mil.
Long-Term Debt was $408 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)|
|=||(1072.45 / 1783.371)||/||(773.815 / 2463.616)|
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)|
|=||(436.216 / 2463.616)||/||(489.283 / 1783.371)|
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 - (1972.834 + 112.02) / 2751.127)||/||(1 - (1577.542 + 127.615) / 2079.363)|
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))|
|=||(47.152 / (47.152 + 127.615))||/||(44.747 / (44.747 + 112.02))|
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)|
|=||(1642.682 / 1783.371)||/||(2089.663 / 2463.616)|
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)|
|=||((706.7 + 1403.004) / 2751.127)||/||((408.356 + 901.342) / 2079.363)|
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|
|=||(4.135 - 44.27||-||183.543)||/||2751.127|
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 -2.22 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
BGC Partners Inc Annual Data
BGC Partners Inc Quarterly Data