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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 6.80. The lowest was -7.36. And the median was -2.34.
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 * 0.9674||+||0.528 * 1.2697||+||0.404 * 0.9682||+||0.892 * 0.9501||+||0.115 * 0.8854|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0331||+||4.679 * -0.0233||-||0.327 * 0.949|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $20 Mil.|
Revenue was 259.022 + 263.51 + 265.497 + 279.87 = $1,068 Mil.
Gross Profit was 77.443 + 93.089 + 98.878 + 99.513 = $369 Mil.
Total Current Assets was $847 Mil.
Total Assets was $7,394 Mil.
Property, Plant and Equipment(Net PPE) was $5,964 Mil.
Depreciation, Depletion and Amortization(DDA) was $177 Mil.
Selling, General & Admin. Expense(SGA) was $89 Mil.
Total Current Liabilities was $201 Mil.
Long-Term Debt was $587 Mil.
Net Income was 13.916 + 19.791 + 37.632 + 31.268 = $103 Mil.
Non Operating Income was -11.223 + 4.388 + 0.681 + -2.246 = $-8 Mil.
Cash Flow from Operations was 58.886 + 92.189 + 62.833 + 69.437 = $283 Mil.
|Accounts Receivable was $22 Mil.
Revenue was 231.741 + 287.254 + 266.929 + 338.068 = $1,124 Mil.
Gross Profit was 80.844 + 126.04 + 115.562 + 170.586 = $493 Mil.
Total Current Assets was $962 Mil.
Total Assets was $7,235 Mil.
Property, Plant and Equipment(Net PPE) was $5,684 Mil.
Depreciation, Depletion and Amortization(DDA) was $149 Mil.
Selling, General & Admin. Expense(SGA) was $90 Mil.
Total Current Liabilities was $228 Mil.
Long-Term Debt was $585 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)|
|=||(19.771 / 1067.899)||/||(21.51 / 1123.992)|
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)|
|=||(93.089 / 1123.992)||/||(77.443 / 1067.899)|
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 - (847.234 + 5963.611) / 7393.64)||/||(1 - (961.804 + 5684.382) / 7235.242)|
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))|
|=||(149.068 / (149.068 + 5684.382))||/||(177.227 / (177.227 + 5963.611))|
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)|
|=||(88.591 / 1067.899)||/||(90.261 / 1123.992)|
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)|
|=||((587.201 + 201.055) / 7393.64)||/||((585.006 + 227.808) / 7235.242)|
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|
|=||(102.607 - -8.4||-||283.345)||/||7393.64|
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 -2.54 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