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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 -2.39.
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 * 1.1123||+||0.528 * 1.0298||+||0.404 * 1.1394||+||0.892 * 0.8356||+||0.115 * 0.7969|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.939||+||4.679 * 0.0039||-||0.327 * 0.9658|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $0.17 Mil.|
Revenue was 14.943 + 12.875 + 18.12 + 17.04 = $62.98 Mil.
Gross Profit was 2.569 + 2.333 + 3.296 + 3.134 = $11.33 Mil.
Total Current Assets was $12.06 Mil.
Total Assets was $16.44 Mil.
Property, Plant and Equipment(Net PPE) was $4.23 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.42 Mil.
Selling, General & Admin. Expense(SGA) was $11.39 Mil.
Total Current Liabilities was $7.36 Mil.
Long-Term Debt was $3.84 Mil.
Net Income was -0.09 + -0.798 + 0.272 + 0.18 = $-0.44 Mil.
Non Operating Income was 0.001 + 0.003 + 0.13 + 0.006 = $0.14 Mil.
Cash Flow from Operations was 0.366 + -0.96 + 0.253 + -0.299 = $-0.64 Mil.
|Accounts Receivable was $0.18 Mil.
Revenue was 17.518 + 18.064 + 20.791 + 19 = $75.37 Mil.
Gross Profit was 3.01 + 3.211 + 4.434 + 3.312 = $13.97 Mil.
Total Current Assets was $14.20 Mil.
Total Assets was $18.86 Mil.
Property, Plant and Equipment(Net PPE) was $4.51 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.35 Mil.
Selling, General & Admin. Expense(SGA) was $14.52 Mil.
Total Current Liabilities was $9.32 Mil.
Long-Term Debt was $3.99 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)|
|=||(0.171 / 62.978)||/||(0.184 / 75.373)|
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)|
|=||(2.333 / 75.373)||/||(2.569 / 62.978)|
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 - (12.064 + 4.227) / 16.439)||/||(1 - (14.202 + 4.506) / 18.857)|
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))|
|=||(0.353 / (0.353 + 4.506))||/||(0.424 / (0.424 + 4.227))|
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)|
|=||(11.394 / 62.978)||/||(14.522 / 75.373)|
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)|
|=||((3.844 + 7.361) / 16.439)||/||((3.991 + 9.317) / 18.857)|
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|
|=||(-0.436 - 0.14||-||-0.64)||/||16.439|
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 -2.43 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