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Sothebys (NYSE:BID)
Beneish M-Score
-2.38 (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 -2.38 suggests that the company is not a manipulator.

BID' s 10-Year Beneish M-Score Range
Min: -3.24   Max: -1.35
Current: -2.38

-3.24
-1.35

During the past 13 years, the highest Beneish M-Score of Sothebys was -1.35. The lowest was -3.24. 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 * 1.224+0.528 * 1.025+0.404 * 0.9117+0.892 * 1.1108+0.115 * 0.9369
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9952+4.679 * -0.0382-0.327 * 0.9967
=-2.38

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $989.1 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 $496.8 Mil.
Total Current Liabilities was $1,142.5 Mil.
Long-Term Debt was $515.1 Mil.
Net Income was 90.753 + -30.131 + 91.729 + -22.345 = $130.0 Mil.
Non Operating Income was 0.516 + 0.982 + -0.168 + 1.699 = $3.0 Mil.
Cash Flow from Operations was 291.94 + -147.425 + 258.996 + -166.084 = $237.4 Mil.
Accounts Receivable was $727.5 Mil.
Revenue was 291.123 + 68.461 + 303.949 + 104.959 = $768.5 Mil.
Gross Profit was 254.888 + 61.683 + 270.082 + 95.056 = $681.7 Mil.
Total Current Assets was $1,671.1 Mil.
Total Assets was $2,575.1 Mil.
Property, Plant and Equipment(Net PPE) was $375.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.9 Mil.
Selling, General & Admin. Expense(SGA) was $449.4 Mil.
Total Current Liabilities was $964.9 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)
=(989.111 / 853.678) / (727.459 / 768.492)
=1.15864647 / 0.94660582
=1.224

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)
=(78.168 / 768.492) / (298.403 / 853.678)
=0.88707365 / 0.86540475
=1.025

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 - (1972.273 + 379.399) / 2893.546) / (1 - (1671.123 + 375.031) / 2575.095)
=0.18726988 / 0.2054064
=0.9117

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
=853.678 / 768.492
=1.1108

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))
=(17.942 / (17.942 + 375.031)) / (19.435 / (19.435 + 379.399))
=0.04565708 / 0.04872955
=0.9369

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)
=(496.767 / 853.678) / (449.359 / 768.492)
=0.58191379 / 0.58472827
=0.9952

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)
=((515.148 + 1142.489) / 2893.546) / ((515.197 + 964.879) / 2575.095)
=0.57287391 / 0.57476559
=0.9967

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
=(130.006 - 3.029 - 237.427) / 2893.546
=-0.0382

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 -2.38 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

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 0.92130.73280.80631.08281.40671.26811.43570.9750.72971.224
GMI 0.99131.00140.99081.00471.00531.00091.00490.99731.03211.025
AQI 1.15320.85661.04841.29531.24071.46951.09111.14721.12610.9117
SGI 1.2831.07431.03180.85340.87990.92390.93641.01971.05771.1108
DEPI 1.05910.93480.91510.91330.94510.99290.96680.95390.96670.9369
SGAI 0.95461.03971.08281.19021.15931.09371.07871.01920.98950.9952
LVGI 0.93020.96090.87310.9361.02590.96521.18230.99160.82970.9967
TATA -0.0746-0.0954-0.00810.02890.09110.0721-0.0297-0.0473-0.0987-0.0382
M-score -2.55-3.16-2.64-2.30-1.73-1.78-2.31-2.65-3.02-2.38
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