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DGSE Companies, Inc. (AMEX:DGSE)
Beneish M-Score
-3.81 (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 -3.81 suggests that the company is not a manipulator.

DGSE' s 10-Year Beneish M-Score Range
Min: -3.81   Max: 8.3
Current: -3.81

-3.81
8.3

During the past 13 years, the highest Beneish M-Score of DGSE Companies, Inc. was 8.30. The lowest was -3.81. And the median was -2.30.


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 * 0.4424+0.528 * 1.0431+0.404 * 0.9881+0.892 * 0.8488+0.115 * 0.9967
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0183+4.679 * -0.1251-0.327 * 1.3426
=-3.81

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $0.3 Mil.
Revenue was 24.722 + 23.755 + 29.524 + 30.541 = $108.5 Mil.
Gross Profit was 5.479 + 4.532 + 4.136 + 5.614 = $19.8 Mil.
Total Current Assets was $16.6 Mil.
Total Assets was $24.9 Mil.
Property, Plant and Equipment(Net PPE) was $5.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.7 Mil.
Selling, General & Admin. Expense(SGA) was $21.4 Mil.
Total Current Liabilities was $10.3 Mil.
Long-Term Debt was $1.8 Mil.
Net Income was -0.405 + -1.432 + -1.123 + 0.3 = $-2.7 Mil.
Non Operating Income was 0.108 + 0.003 + 0.003 + 0.012 = $0.1 Mil.
Cash Flow from Operations was 2.039 + 0.008 + -0.607 + -1.11 = $0.3 Mil.
Accounts Receivable was $0.7 Mil.
Revenue was 37.502 + 28.975 + 28.585 + 32.815 = $127.9 Mil.
Gross Profit was 7.357 + 6.187 + 4.012 + 6.728 = $24.3 Mil.
Total Current Assets was $17.9 Mil.
Total Assets was $26.1 Mil.
Property, Plant and Equipment(Net PPE) was $4.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.7 Mil.
Selling, General & Admin. Expense(SGA) was $24.8 Mil.
Total Current Liabilities was $7.6 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)
=(0.27 / 108.542) / (0.719 / 127.877)
=0.00248752 / 0.00562259
=0.4424

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)
=(4.532 / 127.877) / (5.479 / 108.542)
=0.18990123 / 0.18205856
=1.0431

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 - (16.643 + 5.075) / 24.904) / (1 - (17.884 + 4.85) / 26.115)
=0.12793126 / 0.12946582
=0.9881

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
=108.542 / 127.877
=0.8488

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))
=(0.695 / (0.695 + 4.85)) / (0.73 / (0.73 + 5.075))
=0.12533814 / 0.12575366
=0.9967

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)
=(21.438 / 108.542) / (24.803 / 127.877)
=0.1975088 / 0.19395982
=1.0183

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)
=((1.758 + 10.339) / 24.904) / ((1.843 + 7.605) / 26.115)
=0.48574526 / 0.36178442
=1.3426

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
=(-2.66 - 0.126 - 0.33) / 24.904
=-0.1251

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 -3.81 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 0.82240.61191.23922.50820.31640.39891.13911.31030.49550.4424
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 -2.24-2.47-1.690.68-3.61-3.57-2.298.30-3.65-3.81

DGSE Companies, Inc. Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 0.83371.31030.89710.95521.24670.49551.5570.31250.11480.4424
GMI 1.20431.03940.87090.75740.55580.76110.88390.93111.15421.0431
AQI 1.465325.860.73480.76620.62541.00610.87820.90560.93160.9881
SGI 1.58321.68541.68961.49811.06380.91890.8430.86110.91980.8488
DEPI 1.2031.36091.20151.05940.66030.51020.56850.65350.81260.9967
SGAI 0.65710.66940.87861.19141.8452.0441.71751.35381.04671.0183
LVGI 1.17620.49040.90571.2840.94220.80950.97780.82921.73471.3426
TATA -0.0099-0.09440.0690.02710.125-0.0726-0.1202-0.1305-0.108-0.1251
M-score -1.848.30-1.74-2.29-2.16-3.65-2.95-3.97-4.09-3.81
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