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GuruFocus has detected 3 Warning Signs with Gevo Inc $GEVO.
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Gevo Inc (NAS:GEVO)
Beneish M-Score
-2.98 (As of Today)

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.

Gevo Inc has a M-score of -2.98 suggests that the company is not a manipulator.

GEVO' s Beneish M-Score Range Over the Past 10 Years
Min: -4.31   Max: 6.15
Current: -2.98

-4.31
6.15

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 -2.03.


Definition

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 * 1.0732+0.528 * 0.8002+0.404 * 0.7832+0.892 * 0.8866+0.115 * 0.9793
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.5952+4.679 * -0.0799-0.327 * 0.8915
=-2.98

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $1.08 Mil.
Revenue was 6.944 + 8.113 + 6.32 + 7.297 = $28.67 Mil.
Gross Profit was -2.706 + -1.876 + -2.903 + -1.704 = $-9.19 Mil.
Total Current Assets was $36.19 Mil.
Total Assets was $116.11 Mil.
Property, Plant and Equipment(Net PPE) was $76.51 Mil.
Depreciation, Depletion and Amortization(DDA) was $6.71 Mil.
Selling, General & Admin. Expense(SGA) was $9.63 Mil.
Total Current Liabilities was $40.32 Mil.
Long-Term Debt was $8.78 Mil.
Net Income was -9.849 + -21.487 + -3.605 + -7.962 = $-42.90 Mil.
Non Operating Income was -1.614 + -13.749 + 4.412 + 0.681 = $-10.27 Mil.
Cash Flow from Operations was -4.84 + -5.861 + -5.504 + -7.148 = $-23.35 Mil.
Accounts Receivable was $1.13 Mil.
Revenue was 8.017 + 8.924 + 5.899 + 9.501 = $32.34 Mil.
Gross Profit was -2.612 + -0.974 + -3.335 + -1.372 = $-8.29 Mil.
Total Current Assets was $20.66 Mil.
Total Assets was $100.95 Mil.
Property, Plant and Equipment(Net PPE) was $76.51 Mil.
Depreciation, Depletion and Amortization(DDA) was $6.56 Mil.
Selling, General & Admin. Expense(SGA) was $18.24 Mil.
Total Current Liabilities was $10.53 Mil.
Long-Term Debt was $37.36 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(1.079 / 28.674) / (1.134 / 32.341)
=0.03762991 / 0.03506385
=1.0732

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(-8.293 / 32.341) / (-9.189 / 28.674)
=-0.25642373 / -0.32046453
=0.8002

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (36.189 + 76.507) / 116.11) / (1 - (20.658 + 76.505) / 100.953)
=0.02940315 / 0.03754222
=0.7832

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=28.674 / 32.341
=0.8866

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))
=(6.563 / (6.563 + 76.505)) / (6.714 / (6.714 + 76.507))
=0.07900756 / 0.08067675
=0.9793

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)
=(9.625 / 28.674) / (18.239 / 32.341)
=0.33566994 / 0.56395906
=0.5952

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)
=((8.779 + 40.321) / 116.11) / ((37.362 + 10.526) / 100.953)
=0.42287486 / 0.47435936
=0.8915

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(-42.903 - -10.27 - -23.353) / 116.11
=-0.0799

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 -2.98 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Gevo Inc Annual Data

Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.15070.26370.62895.76880.50580.5526
GMI 5.5582.932-0.18650.27934.55180.9044
AQI 10.39540.13871.76040.92052.15460.9026
SGI 24.84243.93690.37780.33733.4371.0662
DEPI 2.05640.86793.34491.05490.68930.7186
SGAI 0.10940.31044.02981.72240.20890.8536
LVGI 1.40410.51521.20451.04281.35291.0151
TATA -0.3292-0.1102-0.0622-0.1527-0.1295-0.1165
M-score 23.73-0.12-4.310.060.96-3.48

Gevo Inc Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 4.26910.97310.50580.21670.24960.35130.55260.44040.83641.0732
GMI 1.17161.88054.551810.83714.65981.77210.90440.77080.69280.8002
AQI 2.08351.87412.15461.96540.86581.0010.90260.87830.89840.7832
SGI 1.45112.42043.4375.95673.01111.58071.06620.91870.86310.8866
DEPI 1.09040.82850.68930.58070.4890.59210.71860.87280.99610.9793
SGAI 0.4440.28570.20890.12630.24880.60230.85360.86520.86770.5952
LVGI 1.5491.45571.35291.31090.82641.02771.01510.96760.99470.8915
TATA -0.0858-0.0736-0.1295-0.1406-0.1266-0.1493-0.1164-0.1302-0.1021-0.0799
M-score 0.98-0.810.966.150.04-2.84-3.48-3.83-3.41-2.98
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