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Genpact Ltd (NYSE:G)
Beneish M-Score
-2.56 (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.

Genpact Ltd has a M-score of -2.56 suggests that the company is not a manipulator.

G' s 10-Year Beneish M-Score Range
Min: -3.08   Max: -2.14
Current: -2.56

-3.08
-2.14

During the past 12 years, the highest Beneish M-Score of Genpact Ltd was -2.14. The lowest was -3.08. And the median was -2.51.


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 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 * 1.0441+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 * 1.0258+4.679 * -0.0403-0.327 * 1.0656
=-2.56

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

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 $460 Mil.
Total Current Liabilities was $562 Mil.
Long-Term Debt was $659 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)
=(531.117 / 2183.146) / (474.765 / 2037.513)
=0.24328057 / 0.23301201
=1.0441

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)
=(203.901 / 2037.513) / (221.486 / 2183.146)
=0.38576147 / 0.38641529
=0.9983

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 - (1141.055 + 176.282) / 2688.18) / (1 - (1242.616 + 180.606) / 2700.329)
=0.50995209 / 0.47294496
=1.0782

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
=2183.146 / 2037.513
=1.0715

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))
=0.30480271 / 0.29854761
=1.021

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) / (460.208 / 2037.513)
=0.23168858 / 0.22586752
=1.0258

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)
=0.48162363 / 0.45199085
=1.0656

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
=(218.701 - 29.975 - 296.995) / 2688.18
=-0.0403

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.


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 own currency.

Genpact Ltd Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.45990.98760.94071.02811.07291.03480.94510.997
GMI 0.92881.10150.92191.0141.06911.00420.9511.0268
AQI 0.91180.79840.91250.88780.98681.28220.95140.9411
SGI 1.24631.3421.26521.07611.1241.27121.18841.1209
DEPI 1.22521.10970.88561.16711.08370.90191.06790.9267
SGAI 1.08741.08270.86970.96890.94570.97421.07840.9491
LVGI 1.1110.59711.37220.84230.69061.78751.47230.9202
TATA 0.0079-0.0823-0.0527-0.0153-0.0124-0.0218-0.0565-0.0378
M-score -1.90-2.47-2.73-2.42-2.21-2.46-2.83-2.54

Genpact Ltd Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1.1050.85370.94630.94510.89430.96710.90920.9971.01751.0441
GMI 0.95840.93070.92880.9510.97921.0051.0241.02681.01750.9983
AQI 1.26070.94220.96710.95140.97340.94720.95760.94110.93161.0782
SGI 1.31051.27611.22521.18841.15541.14771.1331.12091.09441.0715
DEPI 0.93330.89861.05411.06791.0511.01140.89380.92670.92791.021
SGAI 1.05611.10571.10741.08891.02490.96750.93520.93150.96011.0258
LVGI 1.93561.06131.54731.47231.57711.49740.92560.92020.91471.0656
TATA -0.0161-0.0416-0.0482-0.0734-0.0754-0.0363-0.0317-0.0323-0.0243-0.0403
M-score -2.42-2.67-2.80-2.91-3.00-2.72-2.57-2.51-2.49-2.56
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