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Beneish M-Score 3.19 higher than -2.22, which implies that it might have manipulated its financial results.
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 3.19 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of Geron Corp was 16.27. The lowest was -6.57. And the median was -2.66.
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 * 4.719||+||0.528 * 1||+||0.404 * 7.94||+||0.892 * 0.5545||+||0.115 * 0.8979|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.5592||+||4.679 * -0.0488||-||0.327 * 0.4672|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|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.
Net Income was -8.734 + -8.44 + -9.281 + -8.254 = $-34.71 Mil.
Non Operating Income was -0.147 + 0.224 + -0.109 + -0.208 = $-0.24 Mil.
Cash Flow from Operations was -5.15 + -9.505 + -6.801 + -5.725 = $-27.18 Mil.
|Accounts Receivable was $0.48 Mil.
Revenue was 0.112 + 0.765 + 0.689 + 0.636 = $2.20 Mil.
Gross Profit was 0.112 + 0.765 + 0.689 + 0.636 = $2.20 Mil.
Total Current Assets was $72.43 Mil.
Total Assets was $73.41 Mil.
Property, Plant and Equipment(Net PPE) was $0.57 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.63 Mil.
Selling, General & Admin. Expense(SGA) was $17.68 Mil.
Total Current Liabilities was $5.00 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)|
|=||(1.256 / 1.221)||/||(0.48 / 2.202)|
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)|
|=||(0.474 / 2.202)||/||(0.341 / 1.221)|
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 - (142.592 + 0.06) / 149.339)||/||(1 - (72.431 + 0.566) / 73.411)|
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))|
|=||(0.629 / (0.629 + 0.566))||/||(0.085 / (0.085 + 0.06))|
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)|
|=||(15.288 / 1.221)||/||(17.683 / 2.202)|
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 + 4.756) / 149.339)||/||((0 + 5.004) / 73.411)|
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|
|=||(-34.709 - -0.24||-||-27.181)||/||149.339|
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 3.19 signals that the company is likely to 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