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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 (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $138 Mil.|
Revenue was 463.788 + 333.786 + 325.441 + 449.959 = $1,573 Mil.
Gross Profit was 301.195 + 253.592 + 240.952 + 278.103 = $1,074 Mil.
Total Current Assets was $467 Mil.
Total Assets was $6,515 Mil.
Property, Plant and Equipment(Net PPE) was $4,469 Mil.
Depreciation, Depletion and Amortization(DDA) was $189 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $528 Mil.
Long-Term Debt was $3,211 Mil.
Net Income was 18.168 + 14.131 + 0.669 + 40.002 = $73 Mil.
Non Operating Income was 3.783 + 1.371 + 1.689 + 1.896 = $9 Mil.
Cash Flow from Operations was 95.786 + 1.902 + 84.438 + 138.337 = $320 Mil.
|Accounts Receivable was $79 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 $806 Mil.
Total Assets was $4,627 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 $406 Mil.
Long-Term Debt was $1,854 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)|
|=||(138.497 / 1572.974)||/||(78.743 / 1304.605)|
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)|
|=||(847.718 / 1304.605)||/||(1073.842 / 1572.974)|
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 - (466.814 + 4468.989) / 6515.444)||/||(1 - (806.477 + 3259.094) / 4626.643)|
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))|
|=||(155.37 / (155.37 + 3259.094))||/||(189.043 / (189.043 + 4468.989))|
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 / 1572.974)||/||(0 / 1304.605)|
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)|
|=||((3211.189 + 527.932) / 6515.444)||/||((1853.682 + 406.355) / 4626.643)|
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|
|=||(72.97 - 8.739||-||320.463)||/||6515.444|
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