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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.
During the past 13 years, the highest Beneish M-Score of Black Hills Corp was 0.33. The lowest was -3.54. And the median was -2.61.
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 Black Hills Corp 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 *||+||0.528 *||+||0.404 *||+||0.892 *||+||0.115 *|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 *||+||4.679 *||-||0.327 *|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $147 Mil.|
Revenue was 318.259 + 272.105 + 272.254 + 441.987 = $1,305 Mil.
Gross Profit was 212.15 + 200.478 + 198.43 + 236.66 = $848 Mil.
Total Current Assets was $822 Mil.
Total Assets was $4,656 Mil.
Property, Plant and Equipment(Net PPE) was $3,259 Mil.
Depreciation, Depletion and Amortization(DDA) was $155 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $422 Mil.
Long-Term Debt was $1,867 Mil.
Net Income was -14.176 + -9.943 + -41.842 + 33.85 = $-32 Mil.
Non Operating Income was 1.057 + 1.75 + 0.472 + 0.545 = $4 Mil.
Cash Flow from Operations was 62.131 + 111.465 + 102.921 + 151.487 = $428 Mil.
|Accounts Receivable was $190 Mil.
Revenue was 378.077 + 272.087 + 283.237 + 460.169 = $1,394 Mil.
Gross Profit was 212.768 + 187.413 + 181.906 + 229.701 = $812 Mil.
Total Current Assets was $454 Mil.
Total Assets was $4,246 Mil.
Property, Plant and Equipment(Net PPE) was $3,205 Mil.
Depreciation, Depletion and Amortization(DDA) was $145 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $651 Mil.
Long-Term Debt was $1,268 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(147.486 / 1304.605)||/||(189.992 / 1393.57)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(200.478 / 1393.57)||/||(212.15 / 1304.605)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (822.151 + 3259.094) / 4655.501)||/||(1 - (454.036 + 3205.471) / 4245.902)|
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.
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))|
|=||(144.745 / (144.745 + 3205.471))||/||(155.37 / (155.37 + 3259.094))|
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)|
|=||(0 / 1304.605)||/||(0 / 1393.57)|
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)|
|=||((1866.866 + 422.029) / 4655.501)||/||((1267.589 + 651.281) / 4245.902)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(-32.111 - 3.824||-||428.004)||/||4655.501|
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.
Black Hills Corp has a M-score of signals that the company is likely to be a manipulator.
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
Black Hills Corp Annual Data
Black Hills Corp Quarterly Data