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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 -2.62.
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 * 0.9348||+||0.528 * 1||+||0.404 * 1.623||+||0.892 * 0.9778||+||0.115 * 0.9611|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.772||+||4.679 * 0.2227||-||0.327 * 1.0943|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $1,452 Mil.|
Revenue was 436.216 + 417.581 + 440.291 + 1174.396 = $2,468 Mil.
Gross Profit was 436.216 + 417.581 + 440.291 + 1174.396 = $2,468 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.
Net Income was 7.211 + 7.601 + 8.008 + 4.134 = $27 Mil.
Non Operating Income was 43.252 + -1.925 + -2.072 + -754.624 = $-715 Mil.
Cash Flow from Operations was 51.667 + 29.094 + 0.064 + 63.807 = $145 Mil.
|Accounts Receivable was $1,589 Mil.
Revenue was 404.189 + 1193.167 + 444.969 + 482.177 = $2,525 Mil.
Gross Profit was 404.189 + 1193.167 + 444.969 + 482.177 = $2,525 Mil.
Total Current Assets was $2,495 Mil.
Total Assets was $2,948 Mil.
Property, Plant and Equipment(Net PPE) was $131 Mil.
Depreciation, Depletion and Amortization(DDA) was $48 Mil.
Selling, General & Admin. Expense(SGA) was $2,118 Mil.
Total Current Liabilities was $1,717 Mil.
Long-Term Debt was $273 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)|
|=||(1452.253 / 2468.484)||/||(1588.778 / 2524.502)|
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)|
|=||(417.581 / 2524.502)||/||(436.216 / 2468.484)|
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 - (2093.699 + 114.367) / 2683.787)||/||(1 - (2494.817 + 131.263) / 2948.047)|
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))|
|=||(48.25 / (48.25 + 131.263))||/||(44.404 / (44.404 + 114.367))|
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)|
|=||(1598.756 / 2468.484)||/||(2117.828 / 2524.502)|
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)|
|=||((410.348 + 1571.589) / 2683.787)||/||((272.99 + 1716.561) / 2948.047)|
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|
|=||(26.954 - -715.369||-||144.632)||/||2683.787|
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 -1.26 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