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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 Eldorado Gold Corp was 16.64. The lowest was -15.08. And the median was -2.55.
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 Eldorado Gold Corp 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 * 1.036||+||0.528 * 1.3179||+||0.404 * 1.0445||+||0.892 * 0.887||+||0.115 * 0.9195|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9183||+||4.679 * -0.0739||-||0.327 * 1.0724|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $74.5 Mil.|
Revenue was 211.516 + 214.185 + 238.311 + 259.022 = $923.0 Mil.
Gross Profit was 47.985 + 57.771 + 67.387 + 77.443 = $250.6 Mil.
Total Current Assets was $676.6 Mil.
Total Assets was $7,108.2 Mil.
Property, Plant and Equipment(Net PPE) was $5,822.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $178.7 Mil.
Selling, General & Admin. Expense(SGA) was $75.1 Mil.
Total Current Liabilities was $220.2 Mil.
Long-Term Debt was $588.8 Mil.
Net Income was -96.091 + -198.6 + -8.244 + 13.916 = $-289.0 Mil.
Non Operating Income was 0.768 + 1.706 + 1.244 + -7.733 = $-4.0 Mil.
Cash Flow from Operations was 52.563 + 53.93 + 75.006 + 58.886 = $240.4 Mil.
|Accounts Receivable was $81.0 Mil.
Revenue was 263.51 + 265.497 + 279.87 + 231.741 = $1,040.6 Mil.
Gross Profit was 93.089 + 98.878 + 99.513 + 80.844 = $372.3 Mil.
Total Current Assets was $872.9 Mil.
Total Assets was $7,347.5 Mil.
Property, Plant and Equipment(Net PPE) was $5,872.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $165.3 Mil.
Selling, General & Admin. Expense(SGA) was $92.2 Mil.
Total Current Liabilities was $193.1 Mil.
Long-Term Debt was $586.7 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)|
|=||(74.463 / 923.034)||/||(81.035 / 1040.618)|
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)|
|=||(57.771 / 1040.618)||/||(47.985 / 923.034)|
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 - (676.622 + 5822.828) / 7108.231)||/||(1 - (872.875 + 5872.154) / 7347.523)|
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))|
|=||(165.267 / (165.267 + 5872.154))||/||(178.661 / (178.661 + 5822.828))|
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)|
|=||(75.093 / 923.034)||/||(92.192 / 1040.618)|
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)|
|=||((588.846 + 220.151) / 7108.231)||/||((586.652 + 193.14) / 7347.523)|
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|
|=||(-289.019 - -4.015||-||240.385)||/||7108.231|
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.
Eldorado Gold Corp has a M-score of -2.73 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
Eldorado Gold Corp Annual Data
Eldorado Gold Corp Quarterly Data