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GuruFocus has detected 3 Warning Signs with Geron Corp $GERN.
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Geron Corp (NAS:GERN)
Beneish M-Score
-3.66 (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.

Geron Corp has a M-score of -3.66 suggests that the company is not a manipulator.

GERN' s Beneish M-Score Range Over the Past 10 Years
Min: -4.36   Max: 25.48
Current: -3.66

-4.36
25.48

During the past 13 years, the highest Beneish M-Score of Geron Corp was 25.48. The lowest was -4.36. And the median was -2.71.


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 Geron Corp 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 * 2.3248+0.528 * 1+0.404 * 0.488+0.892 * 0.1694+0.115 * 0.694
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 6.2236+4.679 * -0.0857-0.327 * 1.3547
=-3.66

* 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 $0.48 Mil.
Revenue was 0.094 + 5.108 + 0.211 + 0.749 = $6.16 Mil.
Gross Profit was 0.094 + 5.108 + 0.211 + 0.749 = $6.16 Mil.
Total Current Assets was $116.11 Mil.
Total Assets was $130.25 Mil.
Property, Plant and Equipment(Net PPE) was $0.18 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.08 Mil.
Selling, General & Admin. Expense(SGA) was $18.76 Mil.
Total Current Liabilities was $7.87 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -8.482 + -3.576 + -8.637 + -8.842 = $-29.54 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.00 Mil.
Cash Flow from Operations was -0.602 + -6.553 + -5.636 + -5.578 = $-18.37 Mil.
Accounts Receivable was $1.21 Mil.
Revenue was 0.22 + 35.363 + 0.251 + 0.537 = $36.37 Mil.
Gross Profit was 0.22 + 35.363 + 0.251 + 0.537 = $36.37 Mil.
Total Current Assets was $115.89 Mil.
Total Assets was $148.76 Mil.
Property, Plant and Equipment(Net PPE) was $0.21 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.06 Mil.
Selling, General & Admin. Expense(SGA) was $17.79 Mil.
Total Current Liabilities was $6.63 Mil.
Long-Term Debt was $0.00 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)
=(0.475 / 6.162) / (1.206 / 36.371)
=0.07708536 / 0.03315829
=2.3248

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)
=(36.371 / 36.371) / (6.162 / 6.162)
=1 / 1
=1

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 - (116.112 + 0.183) / 130.249) / (1 - (115.892 + 0.207) / 148.76)
=0.10713326 / 0.21955499
=0.488

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
=6.162 / 36.371
=0.1694

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))
=(0.056 / (0.056 + 0.207)) / (0.081 / (0.081 + 0.183))
=0.21292776 / 0.30681818
=0.694

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)
=(18.761 / 6.162) / (17.793 / 36.371)
=3.04462837 / 0.48920844
=6.2236

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)
=((0 + 7.869) / 130.249) / ((0 + 6.634) / 148.76)
=0.06041505 / 0.04459532
=1.3547

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
=(-29.537 - 0 - -18.369) / 130.249
=-0.0857

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.

Geron Corp has a M-score of -3.66 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.

Geron Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.26723.04362.42680.66121.13570.48411.58361.90.0397
GMI 111111111
AQI 1.25463.074215.98180.4671.36490.01980.704837.90042.0006
SGI 2.32590.36780.61582.06430.68431.11120.47360.898731.5447
DEPI 1.21441.02031.02270.89920.61161.21730.59243.63561.0033
SGAI 0.72412.77861.43930.60941.92690.77161.61741.19350.0337
LVGI 0.27420.75320.94454.23140.48031.68760.79472.15070.1841
TATA -0.1166-0.1113-0.1421-0.278-0.2058-0.1378-0.0205-0.2630.1629
M-score -2.10-1.073.82-4.36-3.49-4.06-2.7111.8325.48

Geron Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 2.06441.90.67461.29930.0520.03970.01740.01225.21942.3248
GMI 1111111111
AQI 39.066137.90042.1722.631.86362.00062.0881.57720.74630.488
SGI 0.68690.89871.22580.922230.274231.544730.084732.45380.17310.1694
DEPI 52.48993.63563.69612.79910.07521.00330.79630.73570.64940.694
SGAI 1.4191.19350.95281.24040.03690.03370.03440.03276.14836.2236
LVGI 0.49252.15078.43318.03880.81150.18410.18980.20211.3511.3547
TATA -0.0716-0.263-0.2885-0.2981-0.06470.16290.15780.1645-0.0477-0.0857
M-score 19.2811.83-5.57-5.1522.9325.4824.1526.0717.70-3.66
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