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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 DGSE Companies Inc was 8.30. The lowest was -10000000.00. And the median was -2.45.
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 * 1.5532||+||0.528 * 1.0557||+||0.404 * 1.0751||+||0.892 * 0.8713||+||0.115 * 0.3668|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0751||+||4.679 * -0.3238||-||0.327 * 1.2616|
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $0.23 Mil.|
Revenue was 10.572 + 15.498 + 11.775 + 16.576 = $54.42 Mil.
Gross Profit was 1.868 + 2.282 + 2.149 + 2.437 = $8.74 Mil.
Total Current Assets was $10.61 Mil.
Total Assets was $12.47 Mil.
Property, Plant and Equipment(Net PPE) was $1.74 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.52 Mil.
Selling, General & Admin. Expense(SGA) was $10.44 Mil.
Total Current Liabilities was $11.26 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -1.51 + -0.537 + -0.69 + -0.895 = $-3.63 Mil.
Non Operating Income was 0.003 + 0 + 0.001 + 0.001 = $0.01 Mil.
Cash Flow from Operations was 0.264 + -0.336 + -0.179 + 0.65 = $0.40 Mil.
|Accounts Receivable was $0.17 Mil.
Revenue was 16.524 + 14.943 + 12.875 + 18.12 = $62.46 Mil.
Gross Profit was 2.387 + 2.569 + 2.333 + 3.296 = $10.59 Mil.
Total Current Assets was $12.36 Mil.
Total Assets was $16.81 Mil.
Property, Plant and Equipment(Net PPE) was $4.31 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.40 Mil.
Selling, General & Admin. Expense(SGA) was $11.15 Mil.
Total Current Liabilities was $9.73 Mil.
Long-Term Debt was $2.32 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)|
|=||(0.226 / 54.421)||/||(0.167 / 62.462)|
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)|
|=||(10.585 / 62.462)||/||(8.736 / 54.421)|
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 - (10.611 + 1.741) / 12.466)||/||(1 - (12.359 + 4.309) / 16.811)|
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))|
|=||(0.397 / (0.397 + 4.309))||/||(0.52 / (0.52 + 1.741))|
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)|
|=||(10.441 / 54.421)||/||(11.147 / 62.462)|
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)|
|=||((0.004 + 11.264) / 12.466)||/||((2.32 + 9.725) / 16.811)|
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|
|=||(-3.632 - 0.005||-||0.399)||/||12.466|
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 -3.71 suggests that the company will not 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
DGSE Companies Inc Annual Data
DGSE Companies Inc Quarterly Data