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Sothebys (NYSE:BID)
Beneish M-Score
-1.97 (As of Today)

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.

Sothebys has a M-score of -1.97 signals that the company is a manipulator.

BID' s Beneish M-Score Range Over the Past 10 Years
Min: -3.52   Max: -1.1
Current: -1.97

-3.52
-1.1

During the past 13 years, the highest Beneish M-Score of Sothebys was -1.10. The lowest was -3.52. And the median was -2.38.


Definition

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 Sothebys 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 * 2.1203+0.528 * 1.0199+0.404 * 0.9879+0.892 * 0.8522+0.115 * 0.9087
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1649+4.679 * -0.0669-0.327 * 1.1382
=-1.97

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $441.5 Mil.
Revenue was 91.492 + 298.665 + 106.531 + 335.821 = $832.5 Mil.
Gross Profit was 52.301 + 255.888 + 81.86 + 253.681 = $643.7 Mil.
Total Current Assets was $1,189.1 Mil.
Total Assets was $2,357.7 Mil.
Property, Plant and Equipment(Net PPE) was $347.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.3 Mil.
Selling, General & Admin. Expense(SGA) was $498.5 Mil.
Total Current Liabilities was $605.3 Mil.
Long-Term Debt was $1,153.5 Mil.
Net Income was -54.47 + 88.964 + -25.884 + -11.153 = $-2.5 Mil.
Non Operating Income was 0.633 + 0.374 + 0.047 + 2.377 = $3.4 Mil.
Cash Flow from Operations was -52.743 + 256.131 + -303.238 + 251.71 = $151.9 Mil.
Accounts Receivable was $244.3 Mil.
Revenue was 137.992 + 332.006 + 155.675 + 351.224 = $976.9 Mil.
Gross Profit was 81.876 + 278.413 + 128.735 + 281.366 = $770.4 Mil.
Total Current Assets was $1,267.8 Mil.
Total Assets was $2,507.2 Mil.
Property, Plant and Equipment(Net PPE) was $355.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $19.6 Mil.
Selling, General & Admin. Expense(SGA) was $502.1 Mil.
Total Current Liabilities was $447.1 Mil.
Long-Term Debt was $1,196.1 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in 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)
=(441.457 / 832.509) / (244.319 / 976.897)
=0.53027295 / 0.25009699
=2.1203

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)
=(770.39 / 976.897) / (643.73 / 832.509)
=0.78860924 / 0.77324089
=1.0199

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 plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (1189.137 + 347.235) / 2357.681) / (1 - (1267.846 + 355.286) / 2507.224)
=0.34835459 / 0.35261788
=0.9879

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=832.509 / 976.897
=0.8522

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))
=(19.649 / (19.649 + 355.286)) / (21.251 / (21.251 + 347.235))
=0.05240642 / 0.05767112
=0.9087

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)
=(498.458 / 832.509) / (502.106 / 976.897)
=0.59874188 / 0.51398049
=1.1649

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)
=((1153.485 + 605.344) / 2357.681) / ((1196.142 + 447.131) / 2507.224)
=0.74599956 / 0.65541531
=1.1382

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
=(-2.543 - 3.431 - 151.86) / 2357.681
=-0.0669

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.

Sothebys has a M-score of -1.97 signals that the company is likely to be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Sothebys Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.84991.55150.86470.97911.14260.75571.16841.22431.02330.9345
GMI 0.99021.04291.11190.89830.96711.00141.00091.0251.04781.0692
AQI 0.98170.83711.27561.06441.04570.85661.46950.91171.24511.0502
SGI 1.29381.38040.75360.70131.59671.07430.92391.11081.09881.025
DEPI 1.02561.07590.87341.9541.29860.93480.99290.93690.91171.026
SGAI 0.93510.92611.20471.08040.75511.03991.09380.99250.89331.0397
LVGI 0.89370.92750.94740.95711.02890.96090.96520.99671.21071.0352
TATA -0.10770.11330.1199-0.1057-0.0814-0.09540.0721-0.03820.0234-0.0337
M-score -2.82-1.10-2.13-3.18-2.13-3.14-1.87-2.38-2.20-2.63

Sothebys Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 0.91821.57051.02330.88340.83410.51450.93451.08061.07792.1203
GMI 1.05061.00941.04781.01131.02711.08421.06921.09481.07181.0199
AQI 1.16651.15451.24511.47071.30961.1831.05020.96320.98370.9879
SGI 1.22641.14951.09881.0310.9931.05491.0250.97380.9420.8522
DEPI 0.92970.90620.91170.94740.97861.00641.0260.99220.94170.9087
SGAI 0.89490.91450.90170.96671.01060.96451.03971.10071.02021.1649
LVGI 1.17641.43761.21071.05650.98021.03891.03521.11361.13461.1382
TATA 0.01640.0370.02340.03780.025-0.0256-0.0337-0.0485-0.0502-0.0669
M-score -2.23-1.72-2.20-2.21-2.38-2.88-2.63-2.68-2.72-1.97
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