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DGSE Companies Inc (AMEX:DGSE)
Beneish M-Score
-3.23 (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 -3.23 suggests that the company is not a manipulator.

DGSE' s Beneish M-Score Range Over the Past 10 Years
Min: -10000000   Max: 6.88
Current: -3.23

-10000000
6.88

During the past 13 years, the highest Beneish M-Score of DGSE Companies Inc was 6.88. The lowest was -10000000.00. And the median was -2.44.


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 * 1.1957+0.528 * 1.1738+0.404 * 0.8968+0.892 * 0.9586+0.115 * 0.8208
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0022+4.679 * -0.183-0.327 * 1.2109
=-3.23

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $0.20 Mil.
Revenue was 15.498 + 11.775 + 16.576 + 16.524 = $60.37 Mil.
Gross Profit was 2.282 + 2.149 + 2.437 + 2.387 = $9.26 Mil.
Total Current Assets was $11.06 Mil.
Total Assets was $15.36 Mil.
Property, Plant and Equipment(Net PPE) was $4.18 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.52 Mil.
Selling, General & Admin. Expense(SGA) was $10.95 Mil.
Total Current Liabilities was $10.37 Mil.
Long-Term Debt was $2.31 Mil.
Net Income was -0.537 + -0.69 + -0.895 + -0.469 = $-2.59 Mil.
Non Operating Income was 0 + 0.001 + 0.008 + 0 = $0.01 Mil.
Cash Flow from Operations was -0.336 + -0.179 + 0.65 + 0.075 = $0.21 Mil.
Accounts Receivable was $0.17 Mil.
Revenue was 14.943 + 12.875 + 18.12 + 17.04 = $62.98 Mil.
Gross Profit was 2.569 + 2.333 + 3.296 + 3.134 = $11.33 Mil.
Total Current Assets was $12.06 Mil.
Total Assets was $16.44 Mil.
Property, Plant and Equipment(Net PPE) was $4.23 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.42 Mil.
Selling, General & Admin. Expense(SGA) was $11.39 Mil.
Total Current Liabilities was $7.36 Mil.
Long-Term Debt was $3.84 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)
=(0.196 / 60.373) / (0.171 / 62.978)
=0.00324648 / 0.00271523
=1.1957

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)
=(11.332 / 62.978) / (9.255 / 60.373)
=0.17993585 / 0.153297
=1.1738

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 - (11.056 + 4.178) / 15.358) / (1 - (12.064 + 4.227) / 16.439)
=0.00807397 / 0.00900298
=0.8968

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
=60.373 / 62.978
=0.9586

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))
=(0.424 / (0.424 + 4.227)) / (0.522 / (0.522 + 4.178))
=0.09116319 / 0.11106383
=0.8208

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)
=(10.947 / 60.373) / (11.394 / 62.978)
=0.18132278 / 0.18092032
=1.0022

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)
=((2.311 + 10.365) / 15.358) / ((3.844 + 7.361) / 16.439)
=0.82536789 / 0.6816108
=1.2109

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
=(-2.591 - 0.009 - 0.21) / 15.358
=-0.183

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 -3.23 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.23922.50820.31640.39891.26491.09950.53180.44245.13710.2955
GMI 1.13270.90051.45410.85421.00540.99980.75261.0431.01811.1201
AQI 1.33892.83670.49820.93431.17820.61371.00610.98810.06451.6358
SGI 1.23331.43571.60760.84340.96721.81220.85460.84880.65180.8611
DEPI 0.95752.0930.60771.17160.80411.19410.66570.99791.55930.726
SGAI 0.86961.22510.53141.53481.06680.74481.93771.01830.90691.0218
LVGI 1.01080.91421.32961.01490.64081.14890.80951.34261.3961.1213
TATA 0.03050.1243-0.2154-0.0517-0.0453-0.045-0.0726-0.1251-0.1648-0.1482
M-score -1.690.68-3.61-3.60-2.32-2.01-3.65-3.81-0.17-3.70

DGSE Companies Inc Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.48370.87452.26825.00750.07861.26750.94080.303112.20071.1957
GMI 0.97190.90580.87950.95231.05681.12941.19671.19741.12591.1738
AQI 1.01280.05990.06060.06450.06811.13941.07441.63581.06310.8968
SGI 0.77940.67880.65260.66860.66960.73320.78890.83940.91250.9586
DEPI 1.03721.17641.3741.55931.72851.20291.14490.7260.69240.8208
SGAI 1.11641.21571.1420.97580.86570.80580.8450.94960.97671.0022
LVGI 1.65341.9051.21541.3961.19440.96581.04591.12131.16391.2109
TATA -0.2064-0.3976-0.3069-0.1661-0.15110.0037-0.0569-0.1484-0.1867-0.183
M-score -4.36-5.48-3.55-0.33-4.63-2.26-2.83-3.666.88-3.23
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