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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 13.16. The lowest was -3.53. And the median was -2.37.
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 (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $124 Mil.|
Revenue was 272.254 + 441.987 + 378.077 + 272.087 = $1,364 Mil.
Gross Profit was 198.43 + 236.66 + 212.768 + 187.413 = $835 Mil.
Total Current Assets was $439 Mil.
Total Assets was $4,220 Mil.
Property, Plant and Equipment(Net PPE) was $3,204 Mil.
Depreciation, Depletion and Amortization(DDA) was $153 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $359 Mil.
Long-Term Debt was $1,568 Mil.
Net Income was -41.842 + 33.85 + 36.115 + 26.836 = $55 Mil.
Non Operating Income was 0.472 + 0.545 + -0.253 + 0.877 = $2 Mil.
Cash Flow from Operations was 102.921 + 151.487 + 84.3 + 65.322 = $404 Mil.
|Accounts Receivable was $135 Mil.
Revenue was 283.237 + 460.169 + 355.448 + 259.907 = $1,359 Mil.
Gross Profit was 181.906 + 229.701 + 202.149 + 188.404 = $802 Mil.
Total Current Assets was $344 Mil.
Total Assets was $3,935 Mil.
Property, Plant and Equipment(Net PPE) was $3,047 Mil.
Depreciation, Depletion and Amortization(DDA) was $139 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $653 Mil.
Long-Term Debt was $1,122 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)|
|=||(123.661 / 1364.405)||/||(135.145 / 1358.761)|
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)|
|=||(236.66 / 1358.761)||/||(198.43 / 1364.405)|
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 - (438.572 + 3203.509) / 4220.271)||/||(1 - (344.055 + 3047.058) / 3934.925)|
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))|
|=||(138.517 / (138.517 + 3047.058))||/||(152.672 / (152.672 + 3203.509))|
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 / 1364.405)||/||(0 / 1358.761)|
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)|
|=||((1567.727 + 358.508) / 4220.271)||/||((1121.95 + 653.283) / 3934.925)|
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|
|=||(54.959 - 1.641||-||404.03)||/||4220.271|
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