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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 5.23. The lowest was -4.63. 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 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 * 0.5474||+||0.528 * 1||+||0.404 * 1.01||+||0.892 * 1.4109||+||0.115 * 0.6443|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0442||+||4.679 * -0.0927||-||0.327 * 0.9015|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $2,300 Mil.|
Revenue was 639.036 + 673.444 + 685.295 + 669.131 = $2,667 Mil.
Gross Profit was 639.036 + 673.444 + 685.295 + 669.131 = $2,667 Mil.
Total Current Assets was $2,986 Mil.
Total Assets was $4,550 Mil.
Property, Plant and Equipment(Net PPE) was $145 Mil.
Depreciation, Depletion and Amortization(DDA) was $85 Mil.
Selling, General & Admin. Expense(SGA) was $2,572 Mil.
Total Current Liabilities was $2,486 Mil.
Long-Term Debt was $839 Mil.
Net Income was 13.659 + 65.015 + 38.371 + 9.347 = $126 Mil.
Non Operating Income was -4.742 + 416.655 + 62.1 + -0.103 = $474 Mil.
Cash Flow from Operations was -202.077 + 86.304 + 133.247 + 56.657 = $74 Mil.
|Accounts Receivable was $2,978 Mil.
Revenue was 547.567 + 489.283 + 436.216 + 417.202 = $1,890 Mil.
Gross Profit was 547.567 + 489.283 + 436.216 + 417.202 = $1,890 Mil.
Total Current Assets was $3,496 Mil.
Total Assets was $5,290 Mil.
Property, Plant and Equipment(Net PPE) was $162 Mil.
Depreciation, Depletion and Amortization(DDA) was $51 Mil.
Selling, General & Admin. Expense(SGA) was $1,746 Mil.
Total Current Liabilities was $3,297 Mil.
Long-Term Debt was $991 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)|
|=||(2300.015 / 2666.906)||/||(2978.168 / 1890.268)|
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)|
|=||(673.444 / 1890.268)||/||(639.036 / 2666.906)|
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 - (2986.346 + 145.378) / 4549.727)||/||(1 - (3495.562 + 162.219) / 5290.242)|
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))|
|=||(50.527 / (50.527 + 162.219))||/||(84.866 / (84.866 + 145.378))|
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)|
|=||(2571.734 / 2666.906)||/||(1745.696 / 1890.268)|
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)|
|=||((838.635 + 2486.176) / 4549.727)||/||((991.382 + 3296.947) / 5290.242)|
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|
|=||(126.392 - 473.91||-||74.131)||/||4549.727|
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 -2.98 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