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Sothebys (NYSE:BID)
Beneish M-Score
-2.72 (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 -2.72 suggests that the company is not a manipulator.

BID' s Beneish M-Score Range Over the Past 10 Years
Min: -3.52   Max: -1.1
Current: -2.72

-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 * 1.0779+0.528 * 1.0718+0.404 * 0.9837+0.892 * 0.942+0.115 * 0.9417
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0292+4.679 * -0.0502-0.327 * 1.1346
=-2.72

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $835.4 Mil.
Revenue was 298.665 + 106.531 + 335.821 + 137.992 = $879.0 Mil.
Gross Profit was 255.888 + 81.86 + 253.681 + 81.876 = $673.3 Mil.
Total Current Assets was $1,649.1 Mil.
Total Assets was $2,808.5 Mil.
Property, Plant and Equipment(Net PPE) was $348.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $20.7 Mil.
Selling, General & Admin. Expense(SGA) was $487.7 Mil.
Total Current Liabilities was $1,021.2 Mil.
Long-Term Debt was $1,125.4 Mil.
Net Income was 88.964 + -25.884 + -11.153 + -17.894 = $34.0 Mil.
Non Operating Income was 0.374 + 0.047 + 2.377 + -2.116 = $0.7 Mil.
Cash Flow from Operations was 256.131 + -303.238 + 251.71 + -30.352 = $174.3 Mil.
Accounts Receivable was $822.7 Mil.
Revenue was 332.006 + 155.675 + 351.224 + 94.201 = $933.1 Mil.
Gross Profit was 278.413 + 128.735 + 281.366 + 77.566 = $766.1 Mil.
Total Current Assets was $1,856.1 Mil.
Total Assets was $3,133.0 Mil.
Property, Plant and Equipment(Net PPE) was $357.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $19.9 Mil.
Selling, General & Admin. Expense(SGA) was $503.1 Mil.
Total Current Liabilities was $1,010.0 Mil.
Long-Term Debt was $1,100.6 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)
=(835.431 / 879.009) / (822.725 / 933.106)
=0.95042372 / 0.88170583
=1.0779

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)
=(766.08 / 933.106) / (673.305 / 879.009)
=0.82099997 / 0.76598192
=1.0718

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 - (1649.08 + 348.91) / 2808.495) / (1 - (1856.1 + 357.768) / 3133.004)
=0.28859051 / 0.29337211
=0.9837

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
=879.009 / 933.106
=0.942

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))
=(19.925 / (19.925 + 357.768)) / (20.706 / (20.706 + 348.91))
=0.05275449 / 0.0560203
=0.9417

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)
=(487.729 / 879.009) / (503.08 / 933.106)
=0.55486235 / 0.53914561
=1.0292

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)
=((1125.444 + 1021.162) / 2808.495) / ((1100.552 + 1009.966) / 3133.004)
=0.76432609 / 0.67364038
=1.1346

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
=(34.033 - 0.682 - 174.251) / 2808.495
=-0.0502

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 -2.72 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

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.94280.91821.57051.02330.88340.83410.51450.93451.08061.0779
GMI 1.05111.05061.00941.04781.01131.02711.08421.06921.09481.0718
AQI 1.02441.16651.15451.24511.47071.30961.1831.06090.96320.9837
SGI 1.18751.22641.14951.09881.0310.9931.05491.0250.97380.942
DEPI 0.92540.92970.90620.91170.94740.97861.00641.0260.99220.9417
SGAI 0.89420.89490.91450.90170.96671.01060.96451.04821.10961.0292
LVGI 1.09741.17641.43761.21071.05650.98021.03891.03661.11361.1346
TATA 0.00510.01640.0370.02340.03780.025-0.0256-0.0336-0.0485-0.0502
M-score -2.33-2.23-1.72-2.20-2.21-2.38-2.88-2.63-2.68-2.72
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