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Beneish M-Score 26.07 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 -2.25.
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 * 0.012||+||0.528 * 0.5372||+||0.404 * 1.5772||+||0.892 * 32.4538||+||0.115 * 0.7357|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.0327||+||4.679 * 0.1645||-||0.327 * 0.2021|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $0.59 Mil.|
Revenue was 0.211 + 0.749 + 0.22 + 35.363 = $36.54 Mil.
Gross Profit was 0 + 0 + 0.22 + 35.363 = $35.58 Mil.
Total Current Assets was $111.70 Mil.
Total Assets was $137.42 Mil.
Property, Plant and Equipment(Net PPE) was $0.19 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.08 Mil.
Selling, General & Admin. Expense(SGA) was $18.56 Mil.
Total Current Liabilities was $7.11 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -8.637 + -8.842 + -8.468 + 27.185 = $1.24 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.00 Mil.
Cash Flow from Operations was -5.636 + -5.578 + -5.251 + -4.905 = $-21.37 Mil.
|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 + 0.178 + 0.16 = $0.59 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.
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)|
|=||(0.586 / 36.543)||/||(1.505 / 1.126)|
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)|
|=||(0.589 / 1.126)||/||(35.583 / 36.543)|
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 - (111.702 + 0.191) / 137.416)||/||(1 - (140.198 + 0.151) / 159.083)|
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))|
|=||(0.04 / (0.04 + 0.151))||/||(0.076 / (0.076 + 0.191))|
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)|
|=||(18.556 / 36.543)||/||(17.488 / 1.126)|
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 + 7.111) / 137.416)||/||((0 + 40.727) / 159.083)|
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|
|=||(1.238 - 0||-||-21.37)||/||137.416|
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 25.82 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