Switch to:
DGSE Companies Inc (AMEX:DGSE)
Beneish M-Score
6.90 (As of Today)

Warning Sign:

Beneish M-Score 6.9 higher than -2.22, which implies that it might have manipulated its financial results.

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 6.90 signals that the company is a manipulator.

DGSE' s Beneish M-Score Range Over the Past 10 Years
Min: -10000000   Max: 8.3
Current: 6.9

-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 -2.42.


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 * 12.2009+0.528 * 1.1259+0.404 * 1.0631+0.892 * 0.9125+0.115 * 0.8792
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9771+4.679 * -0.1867-0.327 * 1.1639
=6.90

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $0.17 Mil.
Revenue was 11.775 + 16.576 + 16.524 + 14.943 = $59.82 Mil.
Gross Profit was 2.149 + 2.437 + 2.387 + 2.569 = $9.54 Mil.
Total Current Assets was $12.09 Mil.
Total Assets was $16.44 Mil.
Property, Plant and Equipment(Net PPE) was $4.20 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.49 Mil.
Selling, General & Admin. Expense(SGA) was $10.89 Mil.
Total Current Liabilities was $10.93 Mil.
Long-Term Debt was $2.31 Mil.
Net Income was -0.69 + -0.895 + -0.469 + -0.09 = $-2.14 Mil.
Non Operating Income was 0.001 + 0.008 + 0 + 0.001 = $0.01 Mil.
Cash Flow from Operations was -0.179 + 0.65 + 0.078 + 0.366 = $0.92 Mil.
Accounts Receivable was $0.02 Mil.
Revenue was 12.875 + 18.12 + 17.04 + 17.518 = $65.55 Mil.
Gross Profit was 2.333 + 3.296 + 3.134 + 3.01 = $11.77 Mil.
Total Current Assets was $12.86 Mil.
Total Assets was $17.25 Mil.
Property, Plant and Equipment(Net PPE) was $4.24 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.43 Mil.
Selling, General & Admin. Expense(SGA) was $12.21 Mil.
Total Current Liabilities was $8.06 Mil.
Long-Term Debt was $3.88 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)
=(0.167 / 59.818) / (0.015 / 65.553)
=0.0027918 / 0.00022882
=12.2009

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)
=(11.773 / 65.553) / (9.542 / 59.818)
=0.17959514 / 0.1595172
=1.1259

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 - (12.086 + 4.2) / 16.44) / (1 - (12.861 + 4.237) / 17.25)
=0.0093674 / 0.00881159
=1.0631

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
=59.818 / 65.553
=0.9125

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))
=(0.432 / (0.432 + 4.237)) / (0.494 / (0.494 + 4.2))
=0.09252517 / 0.10524073
=0.8792

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)
=(10.887 / 59.818) / (12.211 / 65.553)
=0.18200207 / 0.18627675
=0.9771

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)
=((2.314 + 10.929) / 16.44) / ((3.882 + 8.057) / 17.25)
=0.80553528 / 0.69211594
=1.1639

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
=(-2.144 - 0.01 - 0.915) / 16.44
=-0.1867

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 6.90 signals that the company is likely to 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 1.23562.52110.30440.41471.13911.21860.53280.26718.50930.2955
GMI 1.1150.91971.34290.92491.00540.99980.75261.0431.01811.1201
AQI 1.33892.83670.49820.98730.026525.861.00611.13890.0561.6358
SGI 1.23691.42841.6710.81140.96721.81220.85460.84880.65180.8611
DEPI 0.95752.0930.60771.17160.7841.17050.69650.91441.70180.726
SGAI 0.87241.17960.60561.34671.06680.74481.93771.01830.90691.0218
LVGI 1.01080.91421.32961.01491.50140.49040.80951.60711.16621.1213
TATA 0.02630.12430.0475-0.0517-0.0989-0.045-0.0726-0.1251-0.1648-0.1482
M-score -1.720.71-2.41-3.52-3.438.51-3.64-4.013.02-3.70

DGSE Companies Inc Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.31230.57410.94112.20847.27660.06551.11230.87240.295512.2007
GMI 1.10621.08440.98140.91660.960.94421.02981.10841.12011.1259
AQI 1.13891.01280.05990.06060.0560.06811.13941.07441.63581.0631
SGI 0.72580.65670.63070.67030.76220.80310.83560.85080.86110.9125
DEPI 1.75472.761.40721.17540.88780.51160.79860.91580.72420.8792
SGAI 0.88170.9271.0791.08591.04741.04540.93840.96041.02170.9771
LVGI 1.60711.65341.9051.21541.16621.19440.96581.04591.12131.1639
TATA -0.1941-0.2426-0.4551-0.3064-0.1677-0.20050.0017-0.0595-0.1484-0.1867
M-score -4.24-4.26-5.65-3.581.82-4.99-2.44-2.94-3.706.90
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)
FEEDBACK