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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 -2.58 suggests that the company is not a manipulator.

G' s Beneish M-Score Range Over the Past 10 Years
Min: -2.86   Max: -2.15
Current: -2.59

-2.86
-2.15

During the past 13 years, the highest Beneish M-Score of Genpact Ltd was -2.15. The lowest was -2.86. 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 * 0.9981+0.528 * 0.9947+0.404 * 0.9923+0.892 * 1.0446+0.115 * 1.1058
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.029+4.679 * -0.0281-0.327 * 1.0391
=-2.58

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $615 Mil.
Revenue was 681.747 + 648.783 + 630.523 + 609.703 = $2,571 Mil.
Gross Profit was 276.075 + 256.351 + 246.768 + 236.855 = $1,016 Mil.
Total Current Assets was $1,227 Mil.
Total Assets was $2,886 Mil.
Property, Plant and Equipment(Net PPE) was $200 Mil.
Depreciation, Depletion and Amortization(DDA) was $82 Mil.
Selling, General & Admin. Expense(SGA) was $644 Mil.
Total Current Liabilities was $731 Mil.
Long-Term Debt was $701 Mil.
Net Income was 77.109 + 68.779 + 65.231 + 58.565 = $270 Mil.
Non Operating Income was 1.06 + 3.02 + 3.237 + -2.265 = $5 Mil.
Cash Flow from Operations was 122.852 + 143.732 + 90.974 + -11.786 = $346 Mil.
Accounts Receivable was $590 Mil.
Revenue was 646.528 + 617.831 + 609.532 + 587.153 = $2,461 Mil.
Gross Profit was 252.591 + 242.001 + 243.228 + 229.677 = $967 Mil.
Total Current Assets was $1,195 Mil.
Total Assets was $2,793 Mil.
Property, Plant and Equipment(Net PPE) was $175 Mil.
Depreciation, Depletion and Amortization(DDA) was $83 Mil.
Selling, General & Admin. Expense(SGA) was $599 Mil.
Total Current Liabilities was $594 Mil.
Long-Term Debt was $740 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)
=(615.265 / 2570.756) / (590.137 / 2461.044)
=0.23933232 / 0.23979132
=0.9981

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)
=(967.497 / 2461.044) / (1016.049 / 2570.756)
=0.39312463 / 0.39523354
=0.9947

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 - (1227.037 + 200.115) / 2885.88) / (1 - (1195.069 + 175.396) / 2793.489)
=0.50547077 / 0.50940741
=0.9923

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
=2570.756 / 2461.044
=1.0446

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))
=(82.799 / (82.799 + 175.396)) / (81.736 / (81.736 + 200.115))
=0.32068398 / 0.2899972
=1.1058

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)
=(644.016 / 2570.756) / (599.13 / 2461.044)
=0.25051619 / 0.24344546
=1.029

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)
=((700.652 + 731.355) / 2885.88) / ((739.536 + 594.48) / 2793.489)
=0.49621155 / 0.47754475
=1.0391

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
=(269.684 - 5.052 - 345.772) / 2885.88
=-0.0281

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 -2.58 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 local exchange's currency.

Genpact Ltd Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.01640.94070.55231.14021.16431.47120.9970.97351.03960.9981
GMI 1.10150.92191.0141.06911.00420.9511.02680.96371.00590.9947
AQI 0.79840.91250.88930.98521.28220.95140.94111.08981.01380.9923
SGI 1.3421.26521.07611.1241.27121.18841.12091.06921.07971.0446
DEPI 1.10970.88561.16711.08370.90191.06790.92670.98310.97141.1058
SGAI 1.08270.86970.96890.91251.00961.07840.94911.1330.96161.029
LVGI 0.59711.37220.8220.70771.78541.4740.92021.11761.02791.0391
TATA -0.055-0.0527-0.0149-0.0129-0.0507-0.0565-0.0366-0.0236-0.0309-0.0281
M-score -2.31-2.73-2.85-2.15-2.48-2.35-2.53-2.60-2.51-2.58

Genpact Ltd Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.04140.97350.95170.95360.95281.03961.07661.02971.05710.9981
GMI 0.98340.96370.9640.97180.98371.00591.01031.01811.01210.9947
AQI 1.04081.08981.11030.98231.00571.01380.99571.01871.01940.9923
SGI 1.07451.06921.08441.09311.08031.07971.06211.04961.04951.0446
DEPI 1.04570.98310.95810.90540.90250.97141.03141.08581.12781.1058
SGAI 1.12411.1331.14481.09291.01820.96160.95350.981.01331.029
LVGI 1.12251.11761.11130.96230.98841.02791.04330.98411.0181.0391
TATA -0.0166-0.0236-0.0275-0.0258-0.0392-0.0309-0.0153-0.0173-0.0188-0.0281
M-score -2.50-2.60-2.62-2.60-2.65-2.51-2.42-2.45-2.45-2.58
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