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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.
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.
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|
|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
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)|
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)|
|=||(11.773 / 65.553)||/||(9.542 / 59.818)|
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 - (12.086 + 4.2) / 16.44)||/||(1 - (12.861 + 4.237) / 17.25)|
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))|
|=||(0.432 / (0.432 + 4.237))||/||(0.494 / (0.494 + 4.2))|
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)|
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)|
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|
|=||(-2.144 - 0.01||-||0.915)||/||16.44|
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.
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