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GuruFocus has detected 2 Warning Signs with Eldorado Gold Corp $EGO.
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Eldorado Gold Corp (NYSE:EGO)
Beneish M-Score
-3.47 (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.

Eldorado Gold Corp has a M-score of -3.45 suggests that the company is not a manipulator.

EGO' s Beneish M-Score Range Over the Past 10 Years
Min: -7.36   Max: 7.57
Current: -3.47

-7.36
7.57

During the past 13 years, the highest Beneish M-Score of Eldorado Gold Corp was 7.57. The lowest was -7.36. And the median was -2.58.


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 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 * 1.3209+0.528 * 0.6958+0.404 * 0.4728+0.892 * 0.5185+0.115 * 1.7594
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.7647+4.679 * -0.0927-0.327 * 0.9405
=-3.45

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $11.1 Mil.
Revenue was 114.741 + 116.231 + 107.063 + 164.132 = $502.2 Mil.
Gross Profit was 43.244 + 49.123 + 41.633 + 38.179 = $172.2 Mil.
Total Current Assets was $1,092.2 Mil.
Total Assets was $4,797.9 Mil.
Property, Plant and Equipment(Net PPE) was $3,645.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $87.6 Mil.
Selling, General & Admin. Expense(SGA) was $71.5 Mil.
Total Current Liabilities was $90.7 Mil.
Long-Term Debt was $591.6 Mil.
Net Income was -32.549 + 20.74 + -329.864 + -2.478 = $-344.2 Mil.
Non Operating Income was -6.927 + 0.348 + 0.451 + -6.841 = $-13.0 Mil.
Cash Flow from Operations was 48.851 + 59.884 + 2.486 + 2.441 = $113.7 Mil.
Accounts Receivable was $16.1 Mil.
Revenue was 493.186 + 112.372 + 124.561 + 238.311 = $968.4 Mil.
Gross Profit was 97.509 + 29.976 + 36.182 + 67.387 = $231.1 Mil.
Total Current Assets was $572.2 Mil.
Total Assets was $5,464.3 Mil.
Property, Plant and Equipment(Net PPE) was $4,747.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $204.4 Mil.
Selling, General & Admin. Expense(SGA) was $78.1 Mil.
Total Current Liabilities was $236.8 Mil.
Long-Term Debt was $589.4 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)
=(11.053 / 502.167) / (16.137 / 968.43)
=0.02201061 / 0.01666305
=1.3209

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)
=(231.054 / 968.43) / (172.179 / 502.167)
=0.23858617 / 0.34287199
=0.6958

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 - (1092.175 + 3645.827) / 4797.919) / (1 - (572.244 + 4747.759) / 5464.323)
=0.01248812 / 0.02641132
=0.4728

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
=502.167 / 968.43
=0.5185

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))
=(204.384 / (204.384 + 4747.759)) / (87.578 / (87.578 + 3645.827))
=0.04127183 / 0.02345794
=1.7594

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)
=(71.493 / 502.167) / (78.131 / 968.43)
=0.14236897 / 0.080678
=1.7647

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)
=((591.589 + 90.705) / 4797.919) / ((589.395 + 236.819) / 5464.323)
=0.14220624 / 0.15120153
=0.9405

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
=(-344.151 - -12.969 - 113.662) / 4797.919
=-0.0927

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 -3.45 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 local exchange's currency.

Eldorado Gold Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.45540.82310.58860.1240.69747.26420.41320.96741.00961.3665
GMI 0.7460.97641.06741.22110.83991.0891.2041.26971.4730.622
AQI 0.1550.517811.68761.06010.94461.06030.71150.96820.33510.4728
SGI 2.22811.52751.24372.20711.39511.03970.97950.95010.80840.5013
DEPI 0.11181.34572.5370.38660.92632.17160.74260.88540.79441.8049
SGAI 0.6320.93570.68290.88280.91661.11350.98211.03311.02961.4613
LVGI 0.91020.27062.11620.82610.7431.63821.0890.9491.41820.9405
TATA -0.0479-0.0018-0.0268-0.0257-0.0490.0014-0.1362-0.024-0.3216-0.0927
M-score -2.59-2.101.45-2.18-2.653.30-3.74-2.54-4.33-3.40

Eldorado Gold Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.9750.96740.94491.23981.30230.91.06060.58360.68931.3209
GMI 1.33341.26971.20651.231.24521.4481.45381.30931.11750.6958
AQI 0.73390.96821.00081.02931.04450.33510.35320.21720.22650.4728
SGI 0.83770.95010.9630.83190.70560.90690.87130.99021.19930.5185
DEPI 0.86630.88540.92781.06241.17620.69930.74810.52040.48461.7594
SGAI 1.24261.03311.05571.05391.08670.97251.02721.07670.98141.7647
LVGI 1.04360.9490.96831.08431.07241.41821.4211.64321.54550.9405
TATA -0.1166-0.024-0.0306-0.0636-0.0743-0.3216-0.3065-0.3396-0.3227-0.0927
M-score -3.20-2.54-2.61-2.60-2.68-4.36-4.17-4.89-4.58-3.45
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