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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 -15.10. And the median was -2.51.
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 * 0.975||+||0.528 * 1.3334||+||0.404 * 0.7339||+||0.892 * 0.8377||+||0.115 * 0.8663|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2426||+||4.679 * -0.1174||-||0.327 * 1.0436|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $81 Mil.|
Revenue was 263.51 + 265.497 + 279.87 + 231.741 = $1,041 Mil.
Gross Profit was 93.089 + 98.878 + 99.513 + 80.844 = $372 Mil.
Total Current Assets was $873 Mil.
Total Assets was $7,348 Mil.
Property, Plant and Equipment(Net PPE) was $5,872 Mil.
Depreciation, Depletion and Amortization(DDA) was $165 Mil.
Selling, General & Admin. Expense(SGA) was $92 Mil.
Total Current Liabilities was $193 Mil.
Long-Term Debt was $587 Mil.
Net Income was 19.791 + 37.632 + 31.268 + -687.55 = $-599 Mil.
Non Operating Income was 4.388 + 0.681 + -2.246 + -11.19 = $-8 Mil.
Cash Flow from Operations was 92.189 + 62.833 + 69.437 + 47.566 = $272 Mil.
|Accounts Receivable was $99 Mil.
Revenue was 287.254 + 266.929 + 338.068 + 349.962 = $1,242 Mil.
Gross Profit was 126.04 + 115.562 + 170.586 + 180.462 = $593 Mil.
Total Current Assets was $1,049 Mil.
Total Assets was $8,027 Mil.
Property, Plant and Equipment(Net PPE) was $6,081 Mil.
Depreciation, Depletion and Amortization(DDA) was $148 Mil.
Selling, General & Admin. Expense(SGA) was $89 Mil.
Total Current Liabilities was $232 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)|
|=||(81.035 / 1040.618)||/||(99.211 / 1242.213)|
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)|
|=||(98.878 / 1242.213)||/||(93.089 / 1040.618)|
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 - (872.875 + 5872.154) / 7347.523)||/||(1 - (1048.956 + 6081.177) / 8027.026)|
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))|
|=||(147.703 / (147.703 + 6081.177))||/||(165.267 / (165.267 + 5872.154))|
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)|
|=||(92.192 / 1040.618)||/||(88.568 / 1242.213)|
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)|
|=||((586.652 + 193.14) / 7347.523)||/||((584.519 + 231.779) / 8027.026)|
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|
|=||(-598.859 - -8.367||-||272.025)||/||7347.523|
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 -3.20 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