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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 9.98. The lowest was -7.36. 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 * 0.7969||+||0.528 * 0.7698||+||0.404 * 0.4711||+||0.892 * 0.8596||+||0.115 * 1.0058|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.3154||+||4.679 * -0.0936||-||0.327 * 0.9406|
* 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 $87.6 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 -2.604 + 0.348 + 0.451 + -6.841 = $-8.6 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 108.973 + 112.372 + 124.561 + 238.311 = $584.2 Mil.
Gross Profit was 20.65 + 29.976 + 36.182 + 67.387 = $154.2 Mil.
Total Current Assets was $572.2 Mil.
Total Assets was $5,464.9 Mil.
Property, Plant and Equipment(Net PPE) was $4,747.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $114.7 Mil.
Selling, General & Admin. Expense(SGA) was $77.5 Mil.
Total Current Liabilities was $236.8 Mil.
Long-Term Debt was $589.4 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)|
|=||(11.053 / 502.167)||/||(16.137 / 584.217)|
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)|
|=||(154.195 / 584.217)||/||(172.179 / 502.167)|
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 - (1092.175 + 3645.827) / 4797.919)||/||(1 - (572.244 + 4747.759) / 5464.877)|
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))|
|=||(114.726 / (114.726 + 4747.759))||/||(87.578 / (87.578 + 3645.827))|
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)|
|=||(87.633 / 502.167)||/||(77.509 / 584.217)|
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) / 5464.877)|
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|
|=||(-344.151 - -8.646||-||113.662)||/||4797.919|
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 -3.60 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