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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 -2.41.
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|
|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
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)|
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)|
|=||(2.569 / 73.413)||/||(2.387 / 62.462)|
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 - (12.359 + 4.309) / 16.811)||/||(1 - (13.601 + 4.443) / 18.188)|
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))|
|=||(0.372 / (0.372 + 4.443))||/||(0.398 / (0.398 + 4.309))|
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)|
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)|
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|
|=||(-1.085 - 0.178||-||-0.261)||/||16.811|
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.
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