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Genpact Ltd (NYSE:G)
Beneish M-Score
-2.59 (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 -2.59 suggests that the company is not a manipulator.

G' s Beneish M-Score Range Over the Past 10 Years
Min: -3   Max: -2.14
Current: -2.59

-3
-2.14

During the past 13 years, the highest Beneish M-Score of Genpact Ltd was -2.14. The lowest was -3.00. And the median was -2.56.


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 * 0.9528+0.528 * 0.9837+0.404 * 1.0057+0.892 * 1.0803+0.115 * 0.9025
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0182+4.679 * -0.0264-0.327 * 0.9884
=-2.59

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $549 Mil.
Revenue was 617.831 + 609.532 + 587.153 + 601.53 = $2,416 Mil.
Gross Profit was 242.001 + 243.228 + 229.677 + 242.331 = $957 Mil.
Total Current Assets was $1,236 Mil.
Total Assets was $2,789 Mil.
Property, Plant and Equipment(Net PPE) was $164 Mil.
Depreciation, Depletion and Amortization(DDA) was $83 Mil.
Selling, General & Admin. Expense(SGA) was $601 Mil.
Total Current Liabilities was $586 Mil.
Long-Term Debt was $747 Mil.
Net Income was 68.05 + 62.701 + 44.653 + 45.752 = $221 Mil.
Non Operating Income was 0.221 + -14.397 + -9.31 + -28.388 = $-52 Mil.
Cash Flow from Operations was 139 + 90.292 + 24.288 + 93.035 = $347 Mil.
Accounts Receivable was $534 Mil.
Revenue was 588.107 + 561.611 + 528.19 + 558.459 = $2,236 Mil.
Gross Profit was 233.632 + 221.486 + 203.901 + 212.617 = $872 Mil.
Total Current Assets was $1,206 Mil.
Total Assets was $2,739 Mil.
Property, Plant and Equipment(Net PPE) was $176 Mil.
Depreciation, Depletion and Amortization(DDA) was $77 Mil.
Selling, General & Admin. Expense(SGA) was $546 Mil.
Total Current Liabilities was $671 Mil.
Long-Term Debt was $653 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)
=(549.438 / 2416.046) / (533.793 / 2236.367)
=0.22741206 / 0.23868757
=0.9528

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)
=(243.228 / 2236.367) / (242.001 / 2416.046)
=0.38975535 / 0.39619982
=0.9837

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 - (1235.519 + 163.848) / 2789.005) / (1 - (1206.058 + 176.173) / 2739.384)
=0.49825583 / 0.49542269
=1.0057

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
=2416.046 / 2236.367
=1.0803

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))
=(76.988 / (76.988 + 176.173)) / (83.266 / (83.266 + 163.848))
=0.30410687 / 0.33695379
=0.9025

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)
=(600.845 / 2416.046) / (546.194 / 2236.367)
=0.24868939 / 0.24423272
=1.0182

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)
=((747.118 + 585.981) / 2789.005) / ((653.227 + 671.493) / 2739.384)
=0.47798373 / 0.48358317
=0.9884

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
=(221.156 - -51.874 - 346.615) / 2789.005
=-0.0264

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 -2.59 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.52531.01640.94070.55231.14021.16431.47120.9970.9735
GMI 0.92881.10150.92191.0141.06911.00420.9511.02680.9637
AQI 0.91180.79840.91250.88930.98521.28220.95140.94111.0898
SGI 1.24631.3421.26521.07611.1241.27121.18841.12091.0692
DEPI 1.22521.10970.88561.16711.08370.90191.06790.92670.9831
SGAI 1.08741.08270.86970.96890.91251.00961.07840.94911.133
LVGI 1.1110.59711.37220.8220.70771.78541.4740.92021.1176
TATA 0.0079-0.0823-0.0527-0.0149-0.0129-0.0508-0.0565-0.0378-0.0236
M-score -1.84-2.44-2.73-2.85-2.15-2.48-2.35-2.54-2.60

Genpact Ltd Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 0.96690.90910.9971.01741.04421.04140.97350.95170.95360.9528
GMI 1.0051.0241.02681.01750.99830.98340.96370.9640.97180.9837
AQI 0.94720.95760.94110.93161.07821.04081.08981.11030.98231.0057
SGI 1.14771.1331.12091.09441.07151.07451.06921.08441.09311.0803
DEPI 1.01140.89380.92670.92791.0211.04570.98310.95810.90540.9025
SGAI 0.94960.90050.94910.97791.04431.12411.1331.14481.09291.0182
LVGI 1.49740.92560.92020.91471.06561.12251.11761.11130.96230.9884
TATA -0.0363-0.0399-0.0219-0.014-0.0325-0.024-0.021-0.0249-0.0169-0.0264
M-score -2.72-2.61-2.46-2.44-2.52-2.54-2.59-2.61-2.56-2.59
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