Switch to:
Sothebys (NYSE:BID)
Beneish M-Score
-1.72 (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 -1.72 signals that the company is a manipulator.

BID' s 10-Year Beneish M-Score Range
Min: -3.52   Max: -1.1
Current: -1.72

-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 -2.35.


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 * 1.5705+0.528 * 1.0094+0.404 * 1.1545+0.892 * 1.1495+0.115 * 0.9062
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9121+4.679 * 0.037-0.327 * 1.4376
=-1.72

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $450.2 Mil.
Revenue was 94.201 + 335.817 + 156.811 + 339.201 = $926.0 Mil.
Gross Profit was 77.566 + 294.658 + 121.162 + 298.403 = $791.8 Mil.
Total Current Assets was $1,359.3 Mil.
Total Assets was $2,462.7 Mil.
Property, Plant and Equipment(Net PPE) was $369.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $20.6 Mil.
Selling, General & Admin. Expense(SGA) was $492.2 Mil.
Total Current Liabilities was $804.7 Mil.
Long-Term Debt was $749.0 Mil.
Net Income was -27.726 + 77.632 + -6.114 + 90.753 = $134.5 Mil.
Non Operating Income was 1.438 + 0.694 + -1.442 + 0.516 = $1.2 Mil.
Cash Flow from Operations was -186.254 + 204.573 + -268.132 + 291.94 = $42.1 Mil.
Accounts Receivable was $249.3 Mil.
Revenue was 107.864 + 304.868 + 101.745 + 291.123 = $805.6 Mil.
Gross Profit was 78.168 + 269.61 + 92.596 + 254.888 = $695.3 Mil.
Total Current Assets was $1,128.2 Mil.
Total Assets was $2,029.5 Mil.
Property, Plant and Equipment(Net PPE) was $377.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.9 Mil.
Selling, General & Admin. Expense(SGA) was $469.4 Mil.
Total Current Liabilities was $375.5 Mil.
Long-Term Debt was $515.2 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)
=(450.153 / 926.03) / (249.348 / 805.6)
=0.4861106 / 0.30951837
=1.5705

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)
=(294.658 / 805.6) / (77.566 / 926.03)
=0.86303625 / 0.85503601
=1.0094

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 - (1359.328 + 369.333) / 2462.745) / (1 - (1128.166 + 377.368) / 2029.547)
=0.29807552 / 0.2581921
=1.1545

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
=926.03 / 805.6
=1.1495

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))
=(18.94 / (18.94 + 377.368)) / (20.563 / (20.563 + 369.333))
=0.04779111 / 0.0527397
=0.9062

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)
=(492.197 / 926.03) / (469.434 / 805.6)
=0.53151302 / 0.58271351
=0.9121

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)
=((749 + 804.662) / 2462.745) / ((515.151 + 375.465) / 2029.547)
=0.63086596 / 0.43882502
=1.4376

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
=(134.545 - 1.206 - 42.127) / 2462.745
=0.037

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 -1.72 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 own currency.

Sothebys Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.13250.83510.84991.55150.86470.97911.14260.75571.16841.2243
GMI 0.96391.00150.99021.04291.11190.89830.96711.00141.00091.025
AQI 0.62281.11220.98170.83711.20321.12851.04570.85661.46950.9117
SGI 1.56631.03381.29381.38040.75360.70131.59671.07430.92391.1108
DEPI 0.98691.03681.02561.11750.84091.9541.29860.93480.99290.9369
SGAI 0.75521.03320.93510.92611.20471.08040.75511.03991.09380.9952
LVGI 1.34051.10090.89370.92750.92520.98011.02890.96090.96520.9967
TATA -0.04910.0062-0.10880.11330.12-0.1057-0.0814-0.09540.0721-0.0382
M-score -2.32-2.56-2.83-1.10-2.15-3.16-2.13-3.14-1.87-2.38

Sothebys Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.01491.3341.16841.57660.97770.53421.22430.94280.91821.5705
GMI 1.00471.00531.00091.00490.99731.03211.0251.05111.05061.0094
AQI 1.29531.24071.46951.09111.14721.12610.91171.02441.16651.1545
SGI 0.85340.87990.92390.93641.01971.05771.11081.18751.22641.1495
DEPI 0.91330.94510.99290.96680.95390.96670.93690.92540.92970.9062
SGAI 1.19021.15931.09371.07871.00910.97990.9860.89680.89260.9121
LVGI 0.9361.02590.96521.18230.99160.82970.99671.09741.17641.4376
TATA 0.02890.09110.0721-0.0297-0.0473-0.0987-0.03820.00510.01640.037
M-score -2.36-1.80-1.87-2.18-2.65-3.20-2.38-2.33-2.23-1.72
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK