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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.
Genpact Ltd has a M-score of -2.56 suggests that the company is not a manipulator.
During the past 12 years, the highest Beneish M-Score of Genpact Ltd was -2.17. The lowest was -3.08. And the median was -2.56.
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 Genpact Ltd 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 * 1.0442||+||0.528 * 0.9983||+||0.404 * 1.0782||+||0.892 * 1.0715||+||0.115 * 1.021|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0356||+||4.679 * -0.0403||-||0.327 * 1.0656|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $531 Mil.|
Revenue was 561.611 + 528.19 + 558.459 + 534.886 = $2,183 Mil.
Gross Profit was 221.486 + 203.901 + 212.617 + 205.597 = $844 Mil.
Total Current Assets was $1,141 Mil.
Total Assets was $2,688 Mil.
Property, Plant and Equipment(Net PPE) was $176 Mil.
Depreciation, Depletion and Amortization(DDA) was $75 Mil.
Selling, General & Admin. Expense(SGA) was $506 Mil.
Total Current Liabilities was $640 Mil.
Long-Term Debt was $654 Mil.
Net Income was 48.984 + 50.613 + 48.842 + 70.262 = $219 Mil.
Non Operating Income was -2.676 + -3.704 + 46.879 + -10.524 = $30 Mil.
Cash Flow from Operations was 78.825 + 14.241 + 78.387 + 125.542 = $297 Mil.
|Accounts Receivable was $475 Mil.
Revenue was 534.804 + 503.848 + 507.704 + 491.157 = $2,038 Mil.
Gross Profit was 202.09 + 192.122 + 197.878 + 193.904 = $786 Mil.
Total Current Assets was $1,243 Mil.
Total Assets was $2,700 Mil.
Property, Plant and Equipment(Net PPE) was $181 Mil.
Depreciation, Depletion and Amortization(DDA) was $79 Mil.
Selling, General & Admin. Expense(SGA) was $456 Mil.
Total Current Liabilities was $562 Mil.
Long-Term Debt was $659 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)|
|=||(531.093 / 2183.146)||/||(474.702 / 2037.513)|
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)|
|=||(203.901 / 2037.513)||/||(221.486 / 2183.146)|
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 - (1141.055 + 176.282) / 2688.18)||/||(1 - (1242.616 + 180.606) / 2700.329)|
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))|
|=||(79.185 / (79.185 + 180.606))||/||(75.028 / (75.028 + 176.282))|
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)|
|=||(505.81 / 2183.146)||/||(455.848 / 2037.513)|
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)|
|=||((654.444 + 640.247) / 2688.18)||/||((658.51 + 562.014) / 2700.329)|
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|
|=||(218.701 - 29.975||-||296.995)||/||2688.18|
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.
Genpact Ltd has a M-score of -2.56 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
Genpact Ltd Annual Data
Genpact Ltd Quarterly Data