Switch to:
DGSE Companies Inc (AMEX:DGSE)
Beneish M-Score
-3.61 (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.

DGSE Companies Inc has a M-score of -3.61 suggests that the company is not a manipulator.

DGSE' s 10-Year Beneish M-Score Range
Min: -10000000   Max: 8.3
Current: -3.61

-10000000
8.3

During the past 13 years, the highest Beneish M-Score of DGSE Companies Inc was 8.30. The lowest was -10000000.00. And the median was -2.37.


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 DGSE Companies Inc 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 * 1.6768+0.528 * 0.8094+0.404 * 0.0606+0.892 * 0.8828+0.115 * 0.6288
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.3316+4.679 * -0.2135-0.327 * 1.2154
=-3.61

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $0.2 Mil.
Revenue was 17.04 + 17.518 + 19.896 + 42.237 = $96.7 Mil.
Gross Profit was 3.134 + 3.01 + 4.434 + 9.989 = $20.6 Mil.
Total Current Assets was $13.6 Mil.
Total Assets was $18.2 Mil.
Property, Plant and Equipment(Net PPE) was $4.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.8 Mil.
Selling, General & Admin. Expense(SGA) was $22.0 Mil.
Total Current Liabilities was $10.8 Mil.
Long-Term Debt was $1.7 Mil.
Net Income was 0.18 + -4.452 + -0.523 + -0.405 = $-5.2 Mil.
Non Operating Income was 0.006 + 0.031 + 0.031 + 0.126 = $0.2 Mil.
Cash Flow from Operations was -0.299 + -1.356 + -0.179 + 0.324 = $-1.5 Mil.
Accounts Receivable was $0.2 Mil.
Revenue was 19 + 23.775 + 29.25 + 37.502 = $109.5 Mil.
Gross Profit was 3.312 + 2.885 + 5.303 + 7.357 = $18.9 Mil.
Total Current Assets was $16.4 Mil.
Total Assets was $24.8 Mil.
Property, Plant and Equipment(Net PPE) was $5.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.5 Mil.
Selling, General & Admin. Expense(SGA) was $18.7 Mil.
Total Current Liabilities was $12.2 Mil.
Long-Term Debt was $1.8 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)
=(0.225 / 96.691) / (0.152 / 109.527)
=0.002327 / 0.00138779
=1.6768

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)
=(3.01 / 109.527) / (3.134 / 96.691)
=0.17216759 / 0.21270853
=0.8094

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 - (13.601 + 4.443) / 18.188) / (1 - (16.397 + 5.176) / 24.817)
=0.00791731 / 0.13071685
=0.0606

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
=96.691 / 109.527
=0.8828

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))
=(0.517 / (0.517 + 5.176)) / (0.75 / (0.75 + 4.443))
=0.09081328 / 0.14442519
=0.6288

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)
=(22.033 / 96.691) / (18.743 / 109.527)
=0.22787023 / 0.17112675
=1.3316

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)
=((1.652 + 10.808) / 18.188) / ((1.79 + 12.198) / 24.817)
=0.68506708 / 0.56364589
=1.2154

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
=(-5.2 - 0.194 - -1.51) / 18.188
=-0.2135

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.

DGSE Companies Inc has a M-score of -3.61 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.

DGSE Companies Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.03890.61191.23922.50820.31640.39891.13911.31030.49550.4424
GMI 1.02661.13161.13270.90051.45410.85420.95621.03940.76121.043
AQI 0.8510.84781.33892.83670.49820.98730.026525.861.00610.9881
SGI 1.12651.24151.23331.43571.60760.84340.96721.68540.91890.8488
DEPI 1.11391.25190.95752.0930.60771.17160.92161.36090.50960.9979
SGAI 1.0290.88360.86961.22510.53141.53481.12530.66942.04411.0183
LVGI 0.88841.0671.01080.91421.32961.01491.50140.49040.80951.3426
TATA 0.06150.02540.03050.1243-0.2154-0.05170.1491-0.0944-0.0726-0.1251
M-score -2.05-2.47-1.690.68-3.61-3.57-2.298.30-3.65-3.81

DGSE Companies Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.58551.76820.49551.57320.33090.12720.42030.44670.7191.6768
GMI 0.75740.55580.76110.88670.94251.19571.00970.93550.86480.8094
AQI 0.76620.62541.00610.87820.90560.93160.98811.01280.05990.0606
SGI 1.49811.06380.91890.83430.81320.83030.89350.84390.82550.8828
DEPI 1.05940.66030.51020.56850.82471.18750.99671.03720.73330.6288
SGAI 1.19141.8452.0441.71041.30450.96391.03551.13721.30041.3316
LVGI 1.2840.94220.80950.97780.82921.73471.34261.65341.9051.2154
TATA 0.02710.125-0.0726-0.1217-0.1555-0.1771-0.1258-0.2055-0.3651-0.2135
M-score -1.71-1.68-3.65-2.94-4.07-4.40-3.82-4.35-5.43-3.61
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)
Free 7-day Trial
FEEDBACK