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Sothebys (NYSE:BID)
Beneish M-Score
-2.20 (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 -2.20 signals that the company is a manipulator.

BID' s 10-Year Beneish M-Score Range
Min: -3.16   Max: -1.1
Current: -2.2

-3.16
-1.1

During the past 13 years, the highest Beneish M-Score of Sothebys was -1.10. The lowest was -3.16. And the median was -2.40.


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 * 1.0233+0.528 * 1.0478+0.404 * 1.2451+0.892 * 1.0988+0.115 * 0.9117
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8968+4.679 * 0.0234-0.327 * 1.2107
=-2.20

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
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 $483.6 Mil.
Total Current Liabilities was $1,429.2 Mil.
Long-Term Debt was $745.0 Mil.
Net Income was 74.003 + -27.726 + 77.632 + -6.114 = $117.8 Mil.
Non Operating Income was -0.407 + 1.438 + 0.694 + -1.442 = $0.3 Mil.
Cash Flow from Operations was 294.078 + -186.254 + 204.573 + -268.132 = $44.3 Mil.
Accounts Receivable was $812.6 Mil.
Revenue was 339.201 + 107.864 + 304.868 + 101.745 = $853.7 Mil.
Gross Profit was 298.403 + 78.168 + 269.61 + 92.596 = $738.8 Mil.
Total Current Assets was $1,972.3 Mil.
Total Assets was $2,893.5 Mil.
Property, Plant and Equipment(Net PPE) was $379.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $19.4 Mil.
Selling, General & Admin. Expense(SGA) was $490.8 Mil.
Total Current Liabilities was $1,142.5 Mil.
Long-Term Debt was $515.1 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)
=(913.743 / 938.053) / (812.582 / 853.678)
=0.97408462 / 0.95186007
=1.0233

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)
=(77.566 / 853.678) / (281.366 / 938.053)
=0.86540475 / 0.82591495
=1.0478

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 - (2039.522 + 364.382) / 3134.82) / (1 - (1972.273 + 379.399) / 2893.546)
=0.23316044 / 0.18726988
=1.2451

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
=938.053 / 853.678
=1.0988

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))
=(19.435 / (19.435 + 379.399)) / (20.575 / (20.575 + 364.382))
=0.04872955 / 0.05344753
=0.9117

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)
=(483.628 / 938.053) / (490.797 / 853.678)
=0.51556575 / 0.57492052
=0.8968

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)
=((745 + 1429.207) / 3134.82) / ((515.148 + 1142.489) / 2893.546)
=0.69356678 / 0.57287391
=1.2107

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
=(117.795 - 0.283 - 44.265) / 3134.82
=0.0234

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 -2.20 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.83510.84991.55150.86470.97911.14260.75571.16841.22431.0233
GMI 1.00150.99021.04291.11190.89830.96711.00141.00091.0251.0478
AQI 1.11220.98170.83711.20321.12851.04570.85661.46950.91171.2451
SGI 1.03381.29381.38040.75360.70131.59671.07430.92391.11081.0988
DEPI 1.03681.02561.11750.84091.9541.29860.93480.99290.93690.9117
SGAI 1.03320.93510.92611.20471.08040.75511.03991.09380.99250.8933
LVGI 1.10090.89370.92750.92520.98011.02890.96090.96520.99671.2107
TATA 0.0062-0.10880.11330.12-0.1057-0.0814-0.09540.0721-0.03820.0234
M-score -2.56-2.83-1.10-2.15-3.16-2.13-3.14-1.87-2.38-2.20

Sothebys Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.3341.16841.57660.97770.53421.22430.94280.91821.57051.0233
GMI 1.00531.00091.00490.99731.03211.0251.05111.05061.00941.0478
AQI 1.24071.46951.09111.14721.12610.91171.02441.16651.15451.2451
SGI 0.87990.92390.93641.01971.05771.11081.18751.22641.14951.0988
DEPI 0.94510.99290.96680.95390.96670.93690.92540.92970.90620.9117
SGAI 1.15931.09371.07871.00910.97990.98320.89420.89020.90960.8968
LVGI 1.02590.96521.18230.99160.82970.99671.09741.17641.43761.2107
TATA 0.09110.0721-0.0297-0.0473-0.0987-0.03820.00510.01640.0370.0234
M-score -1.80-1.87-2.18-2.65-3.20-2.38-2.33-2.23-1.72-2.20
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