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DGSE Companies Inc (AMEX:DGSE)
Beneish M-Score
-2.94 (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 -2.94 suggests that the company is not a manipulator.

DGSE' s Beneish M-Score Range Over the Past 10 Years
Min: -10000000   Max: 8.3
Current: -2.94

-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 -2.41.


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 * 0.8724+0.528 * 1.1084+0.404 * 1.0744+0.892 * 0.8508+0.115 * 0.9137
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9602+4.679 * -0.0596-0.327 * 1.0459
=-2.94

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $0.17 Mil.
Revenue was 16.524 + 14.943 + 12.875 + 18.12 = $62.46 Mil.
Gross Profit was 2.387 + 2.569 + 2.333 + 3.296 = $10.59 Mil.
Total Current Assets was $12.36 Mil.
Total Assets was $16.81 Mil.
Property, Plant and Equipment(Net PPE) was $4.31 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.40 Mil.
Selling, General & Admin. Expense(SGA) was $11.15 Mil.
Total Current Liabilities was $9.73 Mil.
Long-Term Debt was $2.32 Mil.
Net Income was -0.469 + -0.09 + -0.798 + 0.272 = $-1.09 Mil.
Non Operating Income was 0 + 0.001 + 0.003 + 0.174 = $0.18 Mil.
Cash Flow from Operations was 0.078 + 0.366 + -0.96 + 0.255 = $-0.26 Mil.
Accounts Receivable was $0.23 Mil.
Revenue was 17.04 + 17.518 + 18.064 + 20.791 = $73.41 Mil.
Gross Profit was 3.134 + 3.01 + 3.211 + 4.434 = $13.79 Mil.
Total Current Assets was $13.60 Mil.
Total Assets was $18.19 Mil.
Property, Plant and Equipment(Net PPE) was $4.44 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.37 Mil.
Selling, General & Admin. Expense(SGA) was $13.64 Mil.
Total Current Liabilities was $10.81 Mil.
Long-Term Debt was $1.65 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 / 62.462) / (0.225 / 73.413)
=0.00267363 / 0.00306485
=0.8724

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)
=(2.569 / 73.413) / (2.387 / 62.462)
=0.18782777 / 0.16946303
=1.1084

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 - (12.359 + 4.309) / 16.811) / (1 - (13.601 + 4.443) / 18.188)
=0.00850634 / 0.00791731
=1.0744

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
=62.462 / 73.413
=0.8508

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))
=(0.372 / (0.372 + 4.443)) / (0.398 / (0.398 + 4.309))
=0.07725857 / 0.08455492
=0.9137

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)
=(11.145 / 62.462) / (13.642 / 73.413)
=0.17842848 / 0.1858254
=0.9602

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)
=((2.32 + 9.725) / 16.811) / ((1.652 + 10.808) / 18.188)
=0.71649515 / 0.68506708
=1.0459

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
=(-1.085 - 0.178 - -0.261) / 16.811
=-0.0596

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 -2.94 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.61191.23922.50820.31640.39891.13911.31030.49550.33296.828
GMI 1.13161.13270.90051.45410.85420.95621.03940.76121.16420.9121
AQI 0.84781.33892.83670.49820.98730.026525.861.00611.13890.056
SGI 1.24151.23331.43571.60760.84340.96721.68540.91890.68110.8122
DEPI 1.25190.95752.0930.60771.17160.92161.36090.50961.75690.8857
SGAI 0.88360.86961.22510.53141.53481.12530.66942.04410.85031.0861
LVGI 1.0671.01080.91421.32961.01491.50140.49040.80951.60711.1662
TATA 0.02540.03050.1243-0.2154-0.05170.1491-0.0944-0.0726-0.1934-0.1648
M-score -2.47-1.690.68-3.61-3.57-2.298.30-3.65-4.231.43

DGSE Companies Inc Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 0.33090.12720.31230.57410.94112.20847.27660.06551.11230.8724
GMI 0.94251.19571.10621.08440.98140.91660.960.94421.02981.1084
AQI 0.90560.93161.13891.01280.05990.06060.0560.06811.13941.0744
SGI 0.81320.83030.72580.65670.63070.67030.76220.80310.83560.8508
DEPI 0.82471.18751.75472.761.40721.17540.88570.51050.79690.9137
SGAI 1.30450.96390.88170.9271.0791.08591.04731.04530.93830.9602
LVGI 0.82921.73471.60711.65341.9051.21541.16621.19440.96581.0459
TATA -0.1555-0.1771-0.1941-0.2426-0.4551-0.3064-0.1678-0.20060.0016-0.0596
M-score -4.07-4.40-4.24-4.26-5.65-3.581.82-4.99-2.45-2.94
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