Switch to:
GuruFocus has detected 8 Warning Signs with Sothebys $BID.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Sothebys (NYSE:BID)
Beneish M-Score
-3.05 (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 -3.05 suggests that the company is not a manipulator.

BID' s Beneish M-Score Range Over the Past 10 Years
Min: -3.17   Max: -1.1
Current: -3.05

-3.17
-1.1

During the past 13 years, the highest Beneish M-Score of Sothebys was -1.10. The lowest was -3.17. And the median was -2.44.


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 * 0.5914+0.528 * 0.9835+0.404 * 1.4487+0.892 * 0.8376+0.115 * 0.881
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1244+4.679 * -0.0349-0.327 * 1.0605
=-3.05

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $433.6 Mil.
Revenue was 308.689 + 91.492 + 298.665 + 106.531 = $805.4 Mil.
Gross Profit was 242.484 + 52.301 + 255.888 + 81.86 = $632.5 Mil.
Total Current Assets was $1,268.9 Mil.
Total Assets was $2,504.4 Mil.
Property, Plant and Equipment(Net PPE) was $347.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.8 Mil.
Selling, General & Admin. Expense(SGA) was $488.1 Mil.
Total Current Liabilities was $743.0 Mil.
Long-Term Debt was $1,163.9 Mil.
Net Income was 65.502 + -54.47 + 88.964 + -25.884 = $74.1 Mil.
Non Operating Income was 2.08 + 0.633 + 0.374 + 0.047 = $3.1 Mil.
Cash Flow from Operations was 258.22 + -52.743 + 256.131 + -303.238 = $158.4 Mil.
Accounts Receivable was $875.3 Mil.
Revenue was 335.821 + 137.992 + 332.006 + 155.675 = $961.5 Mil.
Gross Profit was 253.681 + 81.876 + 278.413 + 128.735 = $742.7 Mil.
Total Current Assets was $2,109.7 Mil.
Total Assets was $3,263.3 Mil.
Property, Plant and Equipment(Net PPE) was $354.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $19.5 Mil.
Selling, General & Admin. Expense(SGA) was $518.2 Mil.
Total Current Liabilities was $1,196.6 Mil.
Long-Term Debt was $1,146.5 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)
=(433.614 / 805.377) / (875.265 / 961.494)
=0.53839879 / 0.91031769
=0.5914

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)
=(742.705 / 961.494) / (632.533 / 805.377)
=0.77244892 / 0.78538746
=0.9835

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 - (1268.853 + 347.182) / 2504.426) / (1 - (2109.739 + 354.494) / 3263.313)
=0.35472839 / 0.24486772
=1.4487

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
=805.377 / 961.494
=0.8376

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))
=(19.481 / (19.481 + 354.494)) / (21.817 / (21.817 + 347.182))
=0.05209172 / 0.05912482
=0.881

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)
=(488.1 / 805.377) / (518.243 / 961.494)
=0.60605158 / 0.53899764
=1.1244

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)
=((1163.941 + 742.975) / 2504.426) / ((1146.461 + 1196.573) / 3263.313)
=0.76141838 / 0.71799242
=1.0605

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
=(74.112 - 3.134 - 158.37) / 2504.426
=-0.0349

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 -3.05 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 local exchange's currency.

Sothebys Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.55150.86470.97911.14260.75571.16841.22431.02330.93450.5914
GMI 1.04291.11190.89830.96711.00141.00091.0251.04781.06920.9835
AQI 0.83711.20321.12851.04570.85661.46950.91171.24511.05021.4487
SGI 1.38040.75360.70131.59671.07430.92391.11081.09881.0250.8376
DEPI 1.11750.84091.9541.29860.93480.99290.93690.91171.0260.881
SGAI 0.92611.20471.08040.75511.03991.09380.99250.89331.03971.1244
LVGI 0.92750.92520.98011.02890.96090.96520.99671.21071.03521.0605
TATA 0.11330.12-0.1057-0.0814-0.09540.0721-0.03820.0234-0.0337-0.0349
M-score -1.10-2.15-3.16-2.13-3.14-1.87-2.38-2.20-2.63-3.05

Sothebys Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.57051.02330.88340.83410.51450.93451.08061.07792.12030.5914
GMI 1.00941.04781.01131.02711.08421.06921.09481.07181.01990.9835
AQI 1.15451.24511.47071.30961.1831.05020.96320.98370.98791.4487
SGI 1.14951.09881.0310.9931.05491.0250.97380.9420.85220.8376
DEPI 0.90620.91170.94740.97861.00641.0260.99220.94170.90870.881
SGAI 0.91450.90170.96671.01060.96451.03971.10071.02021.16491.1244
LVGI 1.43761.21071.05650.98021.03891.03521.11361.13461.13821.0605
TATA 0.0370.02340.03780.025-0.0256-0.0337-0.0485-0.0502-0.0669-0.0349
M-score -1.72-2.20-2.21-2.38-2.88-2.63-2.68-2.72-1.97-3.05
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)
FEEDBACK