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Beneish M-Score 17.7 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.
During the past 13 years, the highest Beneish M-Score of Geron Corp was 31.84. The lowest was -6.57. And the median was -2.21.
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 * 25.2194||+||0.528 * 1||+||0.404 * 0.7463||+||0.892 * 0.1731||+||0.115 * 0.6494|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 6.1483||+||4.679 * -0.0477||-||0.327 * 1.351|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $5.40 Mil.|
Revenue was 5.108 + 0.211 + 0.749 + 0.22 = $6.29 Mil.
Gross Profit was 5.108 + 0.211 + 0.749 + 0.22 = $6.29 Mil.
Total Current Assets was $115.06 Mil.
Total Assets was $136.23 Mil.
Property, Plant and Equipment(Net PPE) was $0.17 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.08 Mil.
Selling, General & Admin. Expense(SGA) was $18.89 Mil.
Total Current Liabilities was $7.32 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -3.576 + -8.637 + -8.842 + -8.468 = $-29.52 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.00 Mil.
Cash Flow from Operations was -6.553 + -5.636 + -5.578 + -5.251 = $-23.02 Mil.
|Accounts Receivable was $1.24 Mil.
Revenue was 35.363 + 0.251 + 0.537 + 0.178 = $36.33 Mil.
Gross Profit was 35.363 + 0.251 + 0.537 + 0.178 = $36.33 Mil.
Total Current Assets was $122.02 Mil.
Total Assets was $154.02 Mil.
Property, Plant and Equipment(Net PPE) was $0.18 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.05 Mil.
Selling, General & Admin. Expense(SGA) was $17.75 Mil.
Total Current Liabilities was $6.13 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)|
|=||(5.404 / 6.288)||/||(1.238 / 36.329)|
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)|
|=||(36.329 / 36.329)||/||(6.288 / 6.288)|
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 - (115.056 + 0.17) / 136.231)||/||(1 - (122.015 + 0.183) / 154.019)|
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))|
|=||(0.048 / (0.048 + 0.183))||/||(0.08 / (0.08 + 0.17))|
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)|
|=||(18.888 / 6.288)||/||(17.749 / 36.329)|
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 + 7.319) / 136.231)||/||((0 + 6.125) / 154.019)|
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|
|=||(-29.523 - 0||-||-23.018)||/||136.231|
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 17.70 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