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Beneish M-Score 6.15 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 7 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 * 0.2167||+||0.528 * 10.8371||+||0.404 * 1.9654||+||0.892 * 5.9567||+||0.115 * 0.5807|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.1263||+||4.679 * -0.1406||-||0.327 * 1.3109|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|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.
Net Income was -7.343 + -11.079 + -0.938 + -17.156 = $-36.52 Mil.
Non Operating Income was 4.228 + -0.137 + 10.572 + -2.33 = $12.33 Mil.
Cash Flow from Operations was -9.489 + -6.384 + -7.386 + -12.234 = $-35.49 Mil.
|Accounts Receivable was $1.66 Mil.
Revenue was 0.903 + 1.695 + 1.127 + 1.859 = $5.58 Mil.
Gross Profit was -3.777 + -3.353 + -3.619 + -1.757 = $-12.51 Mil.
Total Current Assets was $14.94 Mil.
Total Assets was $100.26 Mil.
Property, Plant and Equipment(Net PPE) was $83.24 Mil.
Depreciation, Depletion and Amortization(DDA) was $3.37 Mil.
Selling, General & Admin. Expense(SGA) was $23.64 Mil.
Total Current Liabilities was $17.11 Mil.
Long-Term Debt was $22.54 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)|
|=||(2.148 / 33.262)||/||(1.664 / 5.584)|
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)|
|=||(-1.372 / 5.584)||/||(-3.335 / 33.262)|
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 - (11.553 + 79.597) / 95.017)||/||(1 - (14.937 + 83.242) / 100.255)|
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))|
|=||(3.37 / (3.37 + 83.242))||/||(5.716 / (5.716 + 79.597))|
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)|
|=||(17.78 / 33.262)||/||(23.638 / 5.584)|
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)|
|=||((35.567 + 13.702) / 95.017)||/||((22.543 + 17.112) / 100.255)|
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|
|=||(-36.516 - 12.333||-||-35.493)||/||95.017|
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 6.15 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
Gevo Inc Annual Data
Gevo Inc Quarterly Data