Fidelity D & D Bancorp Beneish M-Score Calculation
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski 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 Fidelity D & D Bancorp 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 * 1.2318 | + | 0.528 * 1 | + | 0.404 * 1.0097 | + | 0.892 * 0.8309 | + | 0.115 * 0.9729 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 1.1603 | + | 4.679 * -0.004587 | - | 0.327 * 2.627 |
| = | -3.00 |
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
| This Year (Dec23) TTM: | Last Year (Dec22) TTM: |
Total Receivables was $42.69 Mil.
Revenue was 12.679 + 18.727 + 19.938 + 21.352 = $72.70 Mil.
Gross Profit was 12.679 + 18.727 + 19.938 + 21.352 = $72.70 Mil.
Total Current Assets was $498.68 Mil.
Total Assets was $2,503.16 Mil.
Property, Plant and Equipment(Net PPE) was $43.18 Mil.
Depreciation, Depletion and Amortization(DDA) was $5.70 Mil.
Selling, General, & Admin. Expense(SGA) was $29.94 Mil.
Total Current Liabilities was $117.00 Mil.
Long-Term Debt & Capital Lease Obligation was $17.12 Mil.
Net Income was 0.468 + 5.34 + 5.362 + 7.04 = $18.21 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.00 Mil.
Cash Flow from Operations was 8.317 + 6.306 + 8.017 + 7.052 = $29.69 Mil.
|
Total Receivables was $41.71 Mil.
Revenue was 22.049 + 22.246 + 21.902 + 21.29 = $87.49 Mil.
Gross Profit was 22.049 + 22.246 + 21.902 + 21.29 = $87.49 Mil.
Total Current Assets was $491.66 Mil.
Total Assets was $2,378.37 Mil.
Property, Plant and Equipment(Net PPE) was $41.04 Mil.
Depreciation, Depletion and Amortization(DDA) was $5.26 Mil.
Selling, General, & Admin. Expense(SGA) was $31.05 Mil.
Total Current Liabilities was $30.42 Mil.
Long-Term Debt & Capital Lease Obligation was $18.09 Mil.
|
1. DSRI = Days Sales in Receivables Index
Measured as the ratio of Revenue in Total 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) |
| = | (42.693 / 72.696) | / | (41.71 / 87.487) |
| = | 0.587281 | / | 0.476757 |
| | = | 1.2318 |
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) |
| = | (87.487 / 87.487) | / | (72.696 / 72.696) |
| = | 1 | / | 1 |
| | = | 1 |
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 Property, Plant and Equipment to Total Assets.
| AQI | = | (1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) | / | (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1) |
| = | (1 - (498.682 + 43.176) / 2503.159) | / | (1 - (491.663 + 41.038) / 2378.372) |
| = | 0.78353 | / | 0.776023 |
| | = | 1.0097 |
4. SGI = Sales Growth Index
Ratio of Revenue 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 |
| = | 72.696 | / | 87.487 |
| | = | 0.8309 |
5. DEPI = Depreciation Index
Measured as the ratio of the rate of Depreciation, Depletion and Amortization 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)) |
| = | (5.255 / (5.255 + 41.038)) | / | (5.703 / (5.703 + 43.176)) |
| = | 0.113516 | / | 0.116676 |
| | = | 0.9729 |
Note: If the Depreciation, Depletion and Amortization data is not available, we assume that the depreciation rate is constant and set the Depreciation Index to 1.
6. SGAI = Sales, General and Administrative expenses Index
The ratio of Selling, General, & Admin. Expense(SGA) to Sales 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) |
| = | (29.938 / 72.696) | / | (31.052 / 87.487) |
| = | 0.411825 | / | 0.354933 |
| | = | 1.1603 |
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 in leverage
| LVGI | = | ((LTD_t + CurrentLiabilities_t) / TotalAssets_t) | / | ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1) |
| = | ((17.122 + 117) / 2503.159) | / | ((18.086 + 30.423) / 2378.372) |
| = | 0.053581 | / | 0.020396 |
| | = | 2.627 |
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 |
| = | (18.21 - 0 | - | 29.692) | / | 2503.159 |
| | = | -0.004587 |
An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator. An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.
Fidelity D & D Bancorp has a M-score of -3.00 suggests that the company is unlikely to be a manipulator.
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