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Sothebys (NYSE:BID)
Beneish M-Score
-2.63 (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 -2.63 suggests that the company is not a manipulator.

BID' s Beneish M-Score Range Over the Past 10 Years
Min: -3.17   Max: -1.1
Current: -2.63

-3.17
-1.1

During the past 13 years, the highest Beneish M-Score of Sothebys was -1.10. The lowest was -3.17. And the median was -2.44.


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 * 0.9345+0.528 * 1.0692+0.404 * 1.0609+0.892 * 1.025+0.115 * 1.026
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0397+4.679 * -0.0336-0.327 * 1.0366
=-2.63

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $875.3 Mil.
Revenue was 335.821 + 137.992 + 332.006 + 155.675 = $961.5 Mil.
Gross Profit was 253.681 + 81.876 + 278.413 + 128.735 = $742.7 Mil.
Total Current Assets was $2,109.7 Mil.
Total Assets was $3,274.1 Mil.
Property, Plant and Equipment(Net PPE) was $354.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $19.5 Mil.
Selling, General & Admin. Expense(SGA) was $518.2 Mil.
Total Current Liabilities was $1,197.6 Mil.
Long-Term Debt was $1,156.3 Mil.
Net Income was -11.153 + -17.894 + 67.572 + 5.202 = $43.7 Mil.
Non Operating Income was 2.377 + -2.116 + 0.245 + -1.959 = $-1.5 Mil.
Cash Flow from Operations was 251.71 + -30.352 + 211.063 + -277.363 = $155.1 Mil.
Accounts Receivable was $913.7 Mil.
Revenue was 351.224 + 94.201 + 335.817 + 156.811 = $938.1 Mil.
Gross Profit was 281.366 + 77.566 + 294.658 + 121.162 = $774.8 Mil.
Total Current Assets was $2,039.5 Mil.
Total Assets was $3,134.8 Mil.
Property, Plant and Equipment(Net PPE) was $364.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $20.6 Mil.
Selling, General & Admin. Expense(SGA) was $486.3 Mil.
Total Current Liabilities was $1,429.2 Mil.
Long-Term Debt was $745.0 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)
=(875.265 / 961.494) / (913.743 / 938.053)
=0.91031769 / 0.97408462
=0.9345

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)
=(81.876 / 938.053) / (253.681 / 961.494)
=0.82591495 / 0.77244892
=1.0692

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 - (2109.739 + 354.494) / 3274.129) / (1 - (2039.522 + 364.382) / 3134.82)
=0.24736228 / 0.23316044
=1.0609

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
=961.494 / 938.053
=1.025

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))
=(20.575 / (20.575 + 364.382)) / (19.481 / (19.481 + 354.494))
=0.05344753 / 0.05209172
=1.026

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)
=(518.243 / 961.494) / (486.296 / 938.053)
=0.53899764 / 0.51840994
=1.0397

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)
=((1156.267 + 1197.583) / 3274.129) / ((745 + 1429.207) / 3134.82)
=0.71892403 / 0.69356678
=1.0366

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
=(43.727 - -1.453 - 155.058) / 3274.129
=-0.0336

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 -2.63 suggests that the company will not 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 own 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 0.98170.83711.20321.12851.04570.85661.46950.91171.24511.0609
SGI 1.29381.38040.75360.70131.59671.07430.92391.11081.09881.025
DEPI 1.02561.11750.84091.9541.29860.93480.99290.93690.91171.026
SGAI 0.93510.92611.20471.08040.75511.03991.09380.99250.89331.0397
LVGI 0.89370.92750.92520.98011.02890.96090.96520.99671.21071.0366
TATA -0.10770.11330.12-0.1057-0.0814-0.09540.0721-0.03820.0234-0.0336
M-score -2.82-1.10-2.15-3.16-2.13-3.14-1.87-2.38-2.20-2.63

Sothebys Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.53421.22430.94280.91821.57051.02330.88340.83410.51450.9345
GMI 1.03211.0251.05111.05061.00941.04781.01131.02711.08421.0692
AQI 1.12610.91171.02441.16651.15451.24511.47611.31421.1831.0609
SGI 1.05771.11081.18751.22641.14951.09881.0310.9931.05491.025
DEPI 0.96670.93690.92540.92970.90620.91170.94740.97861.00641.026
SGAI 0.97990.98320.89420.89490.91450.90170.95831.00210.95631.0397
LVGI 0.82970.99671.09741.17641.43761.21071.05770.98091.03891.0366
TATA -0.0987-0.03820.00510.01640.0370.02340.03780.0249-0.0256-0.0336
M-score -3.20-2.38-2.33-2.23-1.72-2.20-2.20-2.38-2.88-2.63
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