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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 -2.37.
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 * 1.6768||+||0.528 * 0.8094||+||0.404 * 0.0606||+||0.892 * 0.8828||+||0.115 * 0.6288|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.3316||+||4.679 * -0.2135||-||0.327 * 1.2154|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $0.2 Mil.|
Revenue was 17.04 + 17.518 + 19.896 + 42.237 = $96.7 Mil.
Gross Profit was 3.134 + 3.01 + 4.434 + 9.989 = $20.6 Mil.
Total Current Assets was $13.6 Mil.
Total Assets was $18.2 Mil.
Property, Plant and Equipment(Net PPE) was $4.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.8 Mil.
Selling, General & Admin. Expense(SGA) was $22.0 Mil.
Total Current Liabilities was $10.8 Mil.
Long-Term Debt was $1.7 Mil.
Net Income was 0.18 + -4.452 + -0.523 + -0.405 = $-5.2 Mil.
Non Operating Income was 0.006 + 0.031 + 0.031 + 0.126 = $0.2 Mil.
Cash Flow from Operations was -0.299 + -1.356 + -0.179 + 0.324 = $-1.5 Mil.
|Accounts Receivable was $0.2 Mil.
Revenue was 19 + 23.775 + 29.25 + 37.502 = $109.5 Mil.
Gross Profit was 3.312 + 2.885 + 5.303 + 7.357 = $18.9 Mil.
Total Current Assets was $16.4 Mil.
Total Assets was $24.8 Mil.
Property, Plant and Equipment(Net PPE) was $5.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.5 Mil.
Selling, General & Admin. Expense(SGA) was $18.7 Mil.
Total Current Liabilities was $12.2 Mil.
Long-Term Debt was $1.8 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)|
|=||(0.225 / 96.691)||/||(0.152 / 109.527)|
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)|
|=||(3.01 / 109.527)||/||(3.134 / 96.691)|
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 - (13.601 + 4.443) / 18.188)||/||(1 - (16.397 + 5.176) / 24.817)|
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))|
|=||(0.517 / (0.517 + 5.176))||/||(0.75 / (0.75 + 4.443))|
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)|
|=||(22.033 / 96.691)||/||(18.743 / 109.527)|
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)|
|=||((1.652 + 10.808) / 18.188)||/||((1.79 + 12.198) / 24.817)|
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|
|=||(-5.2 - 0.194||-||-1.51)||/||18.188|
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 -3.61 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