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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 7 years, the highest Beneish M-Score of Gevo Inc was 6.15. The lowest was -4.31. And the median was -1.14.
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 * 0.3513||+||0.528 * 1.7721||+||0.404 * 1.001||+||0.892 * 1.5807||+||0.115 * 0.5921|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.6023||+||4.679 * -0.1493||-||0.327 * 1.0277|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|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.
Net Income was -6.519 + -14.37 + -7.343 + -11.079 = $-39.31 Mil.
Non Operating Income was 4.876 + -5.81 + 4.228 + -0.137 = $3.16 Mil.
Cash Flow from Operations was -6.127 + -5.396 + -9.489 + -6.384 = $-27.40 Mil.
|Accounts Receivable was $2.04 Mil.
Revenue was 10.141 + 7.721 + 0.903 + 1.695 = $20.46 Mil.
Gross Profit was -1.619 + -0.548 + -3.777 + -3.353 = $-9.30 Mil.
Total Current Assets was $20.94 Mil.
Total Assets was $107.48 Mil.
Property, Plant and Equipment(Net PPE) was $82.51 Mil.
Depreciation, Depletion and Amortization(DDA) was $4.05 Mil.
Selling, General & Admin. Expense(SGA) was $19.16 Mil.
Total Current Liabilities was $10.56 Mil.
Long-Term Debt was $39.05 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)|
|=||(1.134 / 32.341)||/||(2.042 / 20.46)|
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)|
|=||(-0.974 / 20.46)||/||(-2.612 / 32.341)|
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 - (20.658 + 76.505) / 100.953)||/||(1 - (20.94 + 82.51) / 107.481)|
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))|
|=||(4.049 / (4.049 + 82.51))||/||(6.563 / (6.563 + 76.505))|
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)|
|=||(18.239 / 32.341)||/||(19.159 / 20.46)|
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)|
|=||((37.362 + 10.526) / 100.953)||/||((39.045 + 10.563) / 107.481)|
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|
|=||(-39.311 - 3.157||-||-27.396)||/||100.953|
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 -2.84 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