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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.
During the past 12 years, the highest Beneish M-Score of Genpact Ltd. was -2.19. The lowest was -3.08. And the median was -2.58.
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 * 0.997||+||0.528 * 1.0268||+||0.404 * 0.9411||+||0.892 * 1.1209||+||0.115 * 0.9267|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9491||+||4.679 * -0.0433||-||0.327 * 0.9202|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|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.
Net Income was 48.842 + 70.262 + 63.876 + 46.737 = $230 Mil.
Non Operating Income was 46.879 + -10.524 + 6.708 + -8.449 = $35 Mil.
Cash Flow from Operations was 78.387 + 125.542 + 76.127 + 31.548 = $312 Mil.
|Accounts Receivable was $452 Mil.
Revenue was 507.704 + 491.157 + 467.631 + 435.479 = $1,902 Mil.
Gross Profit was 197.878 + 193.904 + 182.409 + 170.014 = $744 Mil.
Total Current Assets was $1,129 Mil.
Total Assets was $2,606 Mil.
Property, Plant and Equipment(Net PPE) was $200 Mil.
Depreciation, Depletion and Amortization(DDA) was $79 Mil.
Selling, General & Admin. Expense(SGA) was $448 Mil.
Total Current Liabilities was $518 Mil.
Long-Term Debt was $659 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(505.117 / 2131.997)||/||(451.989 / 1901.971)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(205.597 / 1901.971)||/||(212.617 / 2131.997)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (1276.144 + 173.204) / 2689.367)||/||(1 - (1128.767 + 200.362) / 2605.927)|
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.
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))|
|=||(79.394 / (79.394 + 200.362))||/||(76.46 / (76.46 + 173.204))|
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)|
|=||(476.366 / 2131.997)||/||(447.76 / 1901.971)|
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)|
|=||((656.258 + 461.693) / 2689.367)||/||((659.412 + 517.818) / 2605.927)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(229.717 - 34.614||-||311.604)||/||2689.367|
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.
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
Genpact Ltd. Annual Data
Genpact Ltd. Quarterly Data