Switch to:
Sothebys (NYSE:BID)
Beneish M-Score
-2.29 (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 -2.29 suggests that the company is not a manipulator.

BID' s 10-Year Beneish M-Score Range
Min: -3.37   Max: -1.35
Current: -2.29

-3.37
-1.35

During the past 13 years, the highest Beneish M-Score of Sothebys was -1.35. The lowest was -3.37. And the median was -2.34.


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 * 0.9822+0.528 * 1.0511+0.404 * 1.0244+0.892 * 1.1875+0.115 * 0.9254
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9052+4.679 * 0.0051-0.327 * 1.0974
=-2.29

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $686.3 Mil.
Revenue was 156.811 + 339.201 + 107.864 + 304.868 = $908.7 Mil.
Gross Profit was 121.162 + 298.403 + 78.168 + 269.61 = $767.3 Mil.
Total Current Assets was $1,274.5 Mil.
Total Assets was $2,150.7 Mil.
Property, Plant and Equipment(Net PPE) was $375.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $20.1 Mil.
Selling, General & Admin. Expense(SGA) was $493.6 Mil.
Total Current Liabilities was $570.8 Mil.
Long-Term Debt was $700.2 Mil.
Net Income was -6.114 + 90.753 + -30.131 + 91.729 = $146.2 Mil.
Non Operating Income was -1.442 + 0.516 + 0.982 + -0.168 = $-0.1 Mil.
Cash Flow from Operations was -268.132 + 291.94 + -147.425 + 258.996 = $135.4 Mil.
Accounts Receivable was $588.4 Mil.
Revenue was 101.745 + 291.123 + 68.461 + 303.949 = $765.3 Mil.
Gross Profit was 92.596 + 254.888 + 61.683 + 270.082 = $679.2 Mil.
Total Current Assets was $1,384.2 Mil.
Total Assets was $2,270.5 Mil.
Property, Plant and Equipment(Net PPE) was $370.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.2 Mil.
Selling, General & Admin. Expense(SGA) was $459.2 Mil.
Total Current Liabilities was $707.5 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)
=(686.329 / 908.744) / (588.447 / 765.278)
=0.7552501 / 0.76893234
=0.9822

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)
=(298.403 / 765.278) / (121.162 / 908.744)
=0.88758464 / 0.84439952
=1.0511

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 - (1274.481 + 375.779) / 2150.738) / (1 - (1384.236 + 370.538) / 2270.52)
=0.23270059 / 0.22714885
=1.0244

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
=908.744 / 765.278
=1.1875

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))
=(18.238 / (18.238 + 370.538)) / (20.066 / (20.066 + 375.779))
=0.04691133 / 0.05069156
=0.9254

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)
=(493.595 / 908.744) / (459.21 / 765.278)
=0.54316177 / 0.60005645
=0.9052

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)
=((700.161 + 570.845) / 2150.738) / ((515.16 + 707.549) / 2270.52)
=0.59096273 / 0.53851497
=1.0974

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
=(146.237 - -0.112 - 135.379) / 2150.738
=0.0051

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 -2.29 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.95110.91020.95231.27480.99770.88731.10690.73281.26811.224
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 -2.49-2.49-2.73-1.35-2.03-3.24-2.16-3.16-1.78-2.38

Sothebys Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.73280.80631.08281.40671.26811.43570.9750.72971.2240.9822
GMI 1.00140.99081.00471.00531.00091.00490.99731.03211.0251.0511
AQI 0.85661.04841.29531.24071.46951.09111.14721.12610.91171.0244
SGI 1.07431.03180.85340.87990.92390.93641.01971.05771.11081.1875
DEPI 0.93480.91510.91330.94510.99290.96680.95390.96670.93690.9254
SGAI 1.03971.08281.19021.15931.09371.07871.01920.98950.99520.9052
LVGI 0.96090.87310.9361.02590.96521.18230.99160.82970.99671.0974
TATA -0.0954-0.00810.02890.09110.0721-0.0297-0.0473-0.0987-0.03820.0051
M-score -3.16-2.64-2.30-1.73-1.78-2.31-2.65-3.02-2.38-2.29
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
Email Hide