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DGSE Companies Inc (AMEX:DGSE)
Beneish M-Score
-4.36 (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 -5.40 suggests that the company is not a manipulator.

DGSE' s 10-Year Beneish M-Score Range
Min: -10000000   Max: 5.53
Current: -4.36

-10000000
5.53

During the past 13 years, the highest Beneish M-Score of DGSE Companies Inc was 5.53. The lowest was -10000000.00. And the median was -2.35.


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 * 0.8258+0.528 * 0.8949+0.404 * 0.0599+0.892 * 0.7187+0.115 * 0.7333
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.2621+4.679 * -0.3643-0.327 * 1.905
=-5.40

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $0.2 Mil.
Revenue was 17.518 + 19.896 + 24.722 + 23.755 = $85.9 Mil.
Gross Profit was 3.01 + 4.434 + 5.479 + 4.532 = $17.5 Mil.
Total Current Assets was $14.2 Mil.
Total Assets was $18.9 Mil.
Property, Plant and Equipment(Net PPE) was $4.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.7 Mil.
Selling, General & Admin. Expense(SGA) was $19.3 Mil.
Total Current Liabilities was $9.3 Mil.
Long-Term Debt was $4.0 Mil.
Net Income was -4.452 + -0.523 + -0.405 + -1.432 = $-6.8 Mil.
Non Operating Income was 0.031 + 0.031 + 0.108 + 0.003 = $0.2 Mil.
Cash Flow from Operations was -1.356 + -0.179 + 2.039 + -0.62 = $-0.1 Mil.
Accounts Receivable was $0.3 Mil.
Revenue was 23.775 + 29.25 + 37.502 + 28.975 = $119.5 Mil.
Gross Profit was 2.885 + 5.303 + 7.357 + 6.187 = $21.7 Mil.
Total Current Assets was $16.7 Mil.
Total Assets was $25.2 Mil.
Property, Plant and Equipment(Net PPE) was $5.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.6 Mil.
Selling, General & Admin. Expense(SGA) was $21.3 Mil.
Total Current Liabilities was $7.5 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)
=(0.184 / 85.891) / (0.31 / 119.502)
=0.00214225 / 0.0025941
=0.8258

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)
=(4.434 / 119.502) / (3.01 / 85.891)
=0.1818547 / 0.20322269
=0.8949

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 - (14.202 + 4.506) / 18.857) / (1 - (16.738 + 5.111) / 25.169)
=0.00790158 / 0.1319083
=0.0599

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
=85.891 / 119.502
=0.7187

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))
=(0.582 / (0.582 + 5.111)) / (0.73 / (0.73 + 4.506))
=0.10223081 / 0.1394194
=0.7333

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)
=(19.284 / 85.891) / (21.259 / 119.502)
=0.22451712 / 0.1778966
=1.2621

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)
=((3.991 + 9.317) / 18.857) / ((1.783 + 7.541) / 25.169)
=0.70573262 / 0.37045572
=1.905

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
=(-6.812 - 0.173 - -0.116) / 18.857
=-0.3643

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 -5.40 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 0.82240.61191.23922.50820.31640.39891.26491.09950.53180.4424
GMI 1.02661.13161.13270.90051.45410.85421.00540.99980.75261.043
AQI 0.8510.84781.33892.83670.49820.93431.17820.61371.00610.9881
SGI 1.12651.24151.23331.43571.60760.84340.96721.81220.85460.8488
DEPI 1.11391.25190.95752.0930.60771.17160.80411.19410.66570.9979
SGAI 1.0290.88360.86961.22510.53141.53481.06680.74481.93771.0183
LVGI 0.88841.0671.01080.91421.32961.01490.64081.14890.80951.3426
TATA 0.06150.02540.03050.1243-0.2154-0.0517-0.0453-0.045-0.0726-0.1251
M-score -2.24-2.47-1.690.68-3.61-3.60-2.32-2.01-3.65-3.81

DGSE Companies Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.86490.9591.30170.53181.66480.34450.12430.47310.50860.8258
GMI 0.89490.8310.66550.75260.85570.89081.07591.05910.97780.8949
AQI 0.73480.76620.62541.00610.87820.90560.93160.98811.01280.0599
SGI 1.75251.49221.01890.85460.78840.78120.85010.79370.74130.7187
DEPI 1.1291.13561.00920.66660.72160.96120.81260.99671.03720.7333
SGAI 0.90751.20421.82751.93761.68791.29831.00360.98171.09141.2621
LVGI 0.90571.2840.94220.80950.97780.82921.73471.34261.65341.905
TATA 0.07540.00060.0585-0.0727-0.117-0.1507-0.1031-0.1251-0.2048-0.3643
M-score -1.68-2.37-2.36-3.65-2.87-4.08-4.15-3.82-4.35-5.40
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