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Genpact Ltd (NYSE:G)
Beneish M-Score
-2.60 (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 -2.60 suggests that the company is not a manipulator.

G' s 10-Year Beneish M-Score Range
Min: -3.08   Max: -2.14
Current: -2.6

-3.08
-2.14

During the past 13 years, the highest Beneish M-Score of Genpact Ltd was -2.14. The lowest was -3.08. And the median was -2.48.


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 * 0.9735+0.528 * 0.9637+0.404 * 1.0898+0.892 * 1.0692+0.115 * 0.9831
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.133+4.679 * -0.0238-0.327 * 1.1176
=-2.60

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $526 Mil.
Revenue was 601.53 + 588.107 + 561.611 + 528.19 = $2,279 Mil.
Gross Profit was 242.331 + 233.632 + 221.486 + 203.901 = $901 Mil.
Total Current Assets was $1,189 Mil.
Total Assets was $2,743 Mil.
Property, Plant and Equipment(Net PPE) was $176 Mil.
Depreciation, Depletion and Amortization(DDA) was $80 Mil.
Selling, General & Admin. Expense(SGA) was $577 Mil.
Total Current Liabilities was $622 Mil.
Long-Term Debt was $652 Mil.
Net Income was 45.752 + 46.653 + 48.984 + 50.613 = $192 Mil.
Non Operating Income was -4.376 + -3.688 + -2.676 + -3.704 = $-14 Mil.
Cash Flow from Operations was 93.035 + 85.737 + 78.825 + 14.241 = $272 Mil.
Accounts Receivable was $505 Mil.
Revenue was 558.459 + 534.886 + 534.804 + 503.848 = $2,132 Mil.
Gross Profit was 212.617 + 205.597 + 202.09 + 192.122 = $812 Mil.
Total Current Assets was $1,276 Mil.
Total Assets was $2,689 Mil.
Property, Plant and Equipment(Net PPE) was $173 Mil.
Depreciation, Depletion and Amortization(DDA) was $76 Mil.
Selling, General & Admin. Expense(SGA) was $476 Mil.
Total Current Liabilities was $462 Mil.
Long-Term Debt was $656 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)
=(525.754 / 2279.438) / (505.117 / 2131.997)
=0.23065071 / 0.236922
=0.9735

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)
=(233.632 / 2131.997) / (242.331 / 2279.438)
=0.38106339 / 0.39542642
=0.9637

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 - (1188.508 + 175.936) / 2742.537) / (1 - (1276.144 + 173.204) / 2689.367)
=0.50248839 / 0.46108211
=1.0898

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
=2279.438 / 2131.997
=1.0692

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))
=(76.46 / (76.46 + 173.204)) / (79.607 / (79.607 + 175.936))
=0.3062516 / 0.31152096
=0.9831

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)
=(577.054 / 2279.438) / (476.366 / 2131.997)
=0.25315626 / 0.22343652
=1.133

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)
=((651.974 + 622.114) / 2742.537) / ((656.258 + 461.693) / 2689.367)
=0.46456547 / 0.41569299
=1.1176

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
=(192.002 - -14.444 - 271.838) / 2742.537
=-0.0238

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 -2.60 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

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.95531.47120.89430.96690.90910.9971.01741.04421.04140.9735
GMI 0.92880.9510.97921.0051.0241.02681.01750.99830.98340.9637
AQI 0.96710.95140.97340.94720.95760.94110.93161.07821.04081.0898
SGI 1.22521.18841.15541.14771.1331.12091.09441.07151.07451.0692
DEPI 1.05411.06791.0511.01140.89380.92670.92791.0211.04570.9831
SGAI 1.20391.06681.00530.94960.90050.94910.97791.04431.12411.133
LVGI 1.54731.4741.57711.49740.92560.92020.91471.06561.12251.1176
TATA -0.0717-0.07-0.075-0.0363-0.0399-0.0219-0.014-0.0299-0.018-0.0238
M-score -2.91-2.41-3.00-2.72-2.61-2.46-2.44-2.51-2.51-2.60
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