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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 8 years, the highest Beneish M-Score of Gevo Inc was 6.15. The lowest was -4.31. And the median was -1.57.
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 Gevo Inc 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 * 0.4404||+||0.528 * 0.7708||+||0.404 * 0.8783||+||0.892 * 0.9187||+||0.115 * 0.8728|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8652||+||4.679 * -0.1302||-||0.327 * 0.9676|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $0.87 Mil.|
Revenue was 6.32 + 7.297 + 8.017 + 8.924 = $30.56 Mil.
Gross Profit was -2.903 + -1.704 + -2.612 + -0.974 = $-8.19 Mil.
Total Current Assets was $13.54 Mil.
Total Assets was $95.51 Mil.
Property, Plant and Equipment(Net PPE) was $78.56 Mil.
Depreciation, Depletion and Amortization(DDA) was $6.53 Mil.
Selling, General & Admin. Expense(SGA) was $14.13 Mil.
Total Current Liabilities was $32.47 Mil.
Long-Term Debt was $15.46 Mil.
Net Income was -3.605 + -7.962 + -6.519 + -14.37 = $-32.46 Mil.
Non Operating Income was 4.412 + 0.681 + 4.876 + -5.81 = $4.16 Mil.
Cash Flow from Operations was -5.504 + -7.148 + -6.127 + -5.396 = $-24.18 Mil.
|Accounts Receivable was $2.15 Mil.
Revenue was 5.899 + 9.501 + 10.141 + 7.721 = $33.26 Mil.
Gross Profit was -3.335 + -1.372 + -1.619 + -0.548 = $-6.87 Mil.
Total Current Assets was $11.55 Mil.
Total Assets was $95.02 Mil.
Property, Plant and Equipment(Net PPE) was $79.60 Mil.
Depreciation, Depletion and Amortization(DDA) was $5.72 Mil.
Selling, General & Admin. Expense(SGA) was $17.78 Mil.
Total Current Liabilities was $13.70 Mil.
Long-Term Debt was $35.57 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)|
|=||(0.869 / 30.558)||/||(2.148 / 33.262)|
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)|
|=||(-1.704 / 33.262)||/||(-2.903 / 30.558)|
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 - (13.536 + 78.562) / 95.512)||/||(1 - (11.553 + 79.597) / 95.017)|
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))|
|=||(5.716 / (5.716 + 79.597))||/||(6.532 / (6.532 + 78.562))|
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)|
|=||(14.132 / 30.558)||/||(17.78 / 33.262)|
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)|
|=||((15.455 + 32.468) / 95.512)||/||((35.567 + 13.702) / 95.017)|
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|
|=||(-32.456 - 4.159||-||-24.175)||/||95.512|
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.
Gevo Inc has a M-score of -3.83 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
Gevo Inc Annual Data
Gevo Inc Quarterly Data