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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.
During the past 13 years, the highest Beneish M-Score of Geron Corp was 19.28. The lowest was -6.57. And the median was -2.53.
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 * 1.2993||+||0.528 * 1||+||0.404 * 2.63||+||0.892 * 0.9222||+||0.115 * 2.7991|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2404||+||4.679 * -0.2981||-||0.327 * 8.0388|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $1.51 Mil.|
Revenue was 0.251 + 0.537 + 0.178 + 0.16 = $1.13 Mil.
Gross Profit was 0.251 + 0.537 + 0.178 + 0.16 = $1.13 Mil.
Total Current Assets was $140.20 Mil.
Total Assets was $159.08 Mil.
Property, Plant and Equipment(Net PPE) was $0.15 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.04 Mil.
Selling, General & Admin. Expense(SGA) was $17.49 Mil.
Total Current Liabilities was $40.73 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -9.356 + -9.315 + -8.947 + -9.549 = $-37.17 Mil.
Non Operating Income was 0 + 0.016 + -0.015 + 0.289 = $0.29 Mil.
Cash Flow from Operations was -6.335 + -7.705 + 28.477 + -4.472 = $9.97 Mil.
|Accounts Receivable was $1.26 Mil.
Revenue was 0.341 + 0.474 + 0.225 + 0.181 = $1.22 Mil.
Gross Profit was 0.341 + 0.474 + 0.225 + 0.181 = $1.22 Mil.
Total Current Assets was $142.59 Mil.
Total Assets was $149.34 Mil.
Property, Plant and Equipment(Net PPE) was $0.06 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.09 Mil.
Selling, General & Admin. Expense(SGA) was $15.29 Mil.
Total Current Liabilities was $4.76 Mil.
Long-Term Debt was $0.00 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)|
|=||(1.505 / 1.126)||/||(1.256 / 1.221)|
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)|
|=||(0.537 / 1.221)||/||(0.251 / 1.126)|
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 - (140.198 + 0.151) / 159.083)||/||(1 - (142.592 + 0.06) / 149.339)|
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))|
|=||(0.085 / (0.085 + 0.06))||/||(0.04 / (0.04 + 0.151))|
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)|
|=||(17.488 / 1.126)||/||(15.288 / 1.221)|
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 + 40.727) / 159.083)||/||((0 + 4.756) / 149.339)|
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|
|=||(-37.167 - 0.29||-||9.965)||/||159.083|
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 -5.15 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
Geron Corp Annual Data
Geron Corp Quarterly Data