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Genpact Ltd (NYSE:G)
Beneish M-Score
-2.43 (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 -2.43 suggests that the company is not a manipulator.

G' s Beneish M-Score Range Over the Past 10 Years
Min: -2.93   Max: -2.15
Current: -2.43

-2.93
-2.15

During the past 13 years, the highest Beneish M-Score of Genpact Ltd was -2.15. The lowest was -2.93. And the median was -2.53.


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 * 1.0766+0.528 * 1.0103+0.404 * 0.9957+0.892 * 1.0621+0.115 * 1.0314
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9535+4.679 * -0.0155-0.327 * 1.0433
=-2.43

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $606 Mil.
Revenue was 609.703 + 646.528 + 617.831 + 609.532 = $2,484 Mil.
Gross Profit was 236.855 + 252.591 + 242.001 + 243.228 = $975 Mil.
Total Current Assets was $1,234 Mil.
Total Assets was $2,844 Mil.
Property, Plant and Equipment(Net PPE) was $180 Mil.
Depreciation, Depletion and Amortization(DDA) was $81 Mil.
Selling, General & Admin. Expense(SGA) was $611 Mil.
Total Current Liabilities was $590 Mil.
Long-Term Debt was $728 Mil.
Net Income was 58.565 + 64.413 + 68.05 + 62.701 = $254 Mil.
Non Operating Income was -2.265 + 11.258 + 1.777 + -4.211 = $7 Mil.
Cash Flow from Operations was -11.786 + 73.861 + 139 + 90.292 = $291 Mil.
Accounts Receivable was $530 Mil.
Revenue was 587.153 + 601.53 + 588.107 + 561.611 = $2,338 Mil.
Gross Profit was 229.677 + 242.331 + 233.632 + 221.486 = $927 Mil.
Total Current Assets was $1,181 Mil.
Total Assets was $2,736 Mil.
Property, Plant and Equipment(Net PPE) was $174 Mil.
Depreciation, Depletion and Amortization(DDA) was $82 Mil.
Selling, General & Admin. Expense(SGA) was $603 Mil.
Total Current Liabilities was $565 Mil.
Long-Term Debt was $651 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)
=(605.598 / 2483.594) / (529.618 / 2338.401)
=0.24383937 / 0.22648724
=1.0766

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)
=(927.126 / 2338.401) / (974.675 / 2483.594)
=0.39647862 / 0.39244538
=1.0103

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 - (1233.928 + 179.699) / 2843.564) / (1 - (1180.804 + 173.576) / 2736.269)
=0.50286788 / 0.50502674
=0.9957

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
=2483.594 / 2338.401
=1.0621

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))
=(82.106 / (82.106 + 173.576)) / (81.241 / (81.241 + 179.699))
=0.32112546 / 0.31133977
=1.0314

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)
=(610.708 / 2483.594) / (603.019 / 2338.401)
=0.24589687 / 0.25787664
=0.9535

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)
=((727.538 + 590.369) / 2843.564) / ((650.79 + 564.719) / 2736.269)
=0.46347014 / 0.44422131
=1.0433

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
=(253.729 - 6.559 - 291.367) / 2843.564
=-0.0155

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 -2.43 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.52531.01640.94070.55231.14021.16431.47120.9970.97351.0396
GMI 0.92881.10150.92191.0141.06911.00420.9511.02680.96371.0059
AQI 0.91180.79840.91250.88930.98521.28220.95140.94111.08981.0138
SGI 1.24631.3421.26521.07611.1241.27121.18841.12091.06921.0797
DEPI 1.22521.10970.88561.16711.08370.90191.06790.92670.98310.9714
SGAI 1.08741.08270.83151.01350.94570.97421.07840.94911.1330.9616
LVGI 1.1110.59711.37220.8220.70771.78541.4740.92021.11761.0279
TATA 0.0004-0.055-0.0477-0.0153-0.0124-0.0507-0.0565-0.0378-0.0236-0.0312
M-score -1.87-2.31-2.70-2.86-2.15-2.47-2.35-2.54-2.60-2.52

Genpact Ltd Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.9971.01741.04421.04140.97350.95170.95360.95281.03961.0766
GMI 1.02681.01750.99830.98340.96370.9640.97180.98371.00591.0103
AQI 0.94110.93161.07821.04081.08981.11030.98231.00571.01380.9957
SGI 1.12091.09441.07151.07451.06921.08441.09311.08031.07971.0621
DEPI 0.92670.92791.0211.04570.98310.95810.90540.90250.97141.0314
SGAI 0.94910.97791.04431.12411.1331.14481.09291.01820.96160.9535
LVGI 0.92020.91471.06561.12251.11761.11130.96230.98841.02791.0433
TATA -0.0334-0.0255-0.0285-0.0166-0.0254-0.0292-0.0276-0.0409-0.0312-0.0155
M-score -2.51-2.49-2.50-2.50-2.61-2.63-2.61-2.66-2.52-2.43
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