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GuruFocus has detected 4 Warning Signs with Gevo Inc $GEVO.
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Gevo Inc (NAS:GEVO)
Beneish M-Score
-3.15 (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 -3.15 suggests that the company is not a manipulator.

GEVO' s Beneish M-Score Range Over the Past 10 Years
Min: -4.31   Max: 0.96
Current: -3.15

-4.31
0.96

During the past 9 years, the highest Beneish M-Score of Gevo Inc was 0.96. The lowest was -4.31. And the median was -1.64.


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 * 0.8933+0.528 * 0.7944+0.404 * 0.8446+0.892 * 0.903+0.115 * 0.9624
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.5949+4.679 * -0.1007-0.327 * 0.7203
=-3.15

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

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $1.12 Mil.
Revenue was 5.836 + 6.944 + 8.113 + 6.32 = $27.21 Mil.
Gross Profit was -2.319 + -2.706 + -1.876 + -2.903 = $-9.80 Mil.
Total Current Assets was $33.32 Mil.
Total Assets was $112.32 Mil.
Property, Plant and Equipment(Net PPE) was $75.59 Mil.
Depreciation, Depletion and Amortization(DDA) was $6.75 Mil.
Selling, General & Admin. Expense(SGA) was $8.97 Mil.
Total Current Liabilities was $34.66 Mil.
Long-Term Debt was $8.22 Mil.
Net Income was -2.289 + -9.849 + -21.487 + -3.605 = $-37.23 Mil.
Non Operating Income was 5.544 + -1.614 + -13.749 + 4.412 = $-5.41 Mil.
Cash Flow from Operations was -4.311 + -4.84 + -5.861 + -5.504 = $-20.52 Mil.
Accounts Receivable was $1.39 Mil.
Revenue was 7.297 + 8.017 + 8.924 + 5.899 = $30.14 Mil.
Gross Profit was -1.704 + -2.612 + -0.974 + -3.335 = $-8.63 Mil.
Total Current Assets was $22.64 Mil.
Total Assets was $103.13 Mil.
Property, Plant and Equipment(Net PPE) was $76.78 Mil.
Depreciation, Depletion and Amortization(DDA) was $6.57 Mil.
Selling, General & Admin. Expense(SGA) was $16.69 Mil.
Total Current Liabilities was $18.30 Mil.
Long-Term Debt was $36.35 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)
=(1.122 / 27.213) / (1.391 / 30.137)
=0.04123029 / 0.04615589
=0.8933

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)
=(-8.625 / 30.137) / (-9.804 / 27.213)
=-0.28619305 / -0.36026899
=0.7944

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 - (33.318 + 75.592) / 112.324) / (1 - (22.64 + 76.777) / 103.128)
=0.03039422 / 0.03598441
=0.8446

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
=27.213 / 30.137
=0.903

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))
=(6.573 / (6.573 + 76.777)) / (6.747 / (6.747 + 75.592))
=0.07886023 / 0.08194173
=0.9624

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)
=(8.967 / 27.213) / (16.692 / 30.137)
=0.32951163 / 0.55387066
=0.5949

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)
=((8.221 + 34.66) / 112.324) / ((36.354 + 18.301) / 103.128)
=0.38176169 / 0.52997246
=0.7203

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
=(-37.23 - -5.407 - -20.516) / 112.324
=-0.1007

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 -3.15 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

Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.15070.26370.62895.76880.50580.55260.8933
GMI 5.5582.932-0.18650.27934.55180.90440.7944
AQI 10.39540.13871.76040.92052.15460.90260.8446
SGI 24.84243.93690.37780.33733.4371.06620.903
DEPI 2.05640.86793.34491.05490.68930.71860.9624
SGAI 0.10940.31044.02981.72240.20890.85360.5948
LVGI 1.40410.51521.20451.04281.35291.01510.7203
TATA -0.3292-0.1102-0.0622-0.1527-0.1295-0.1165-0.1007
M-score 23.73-0.12-4.310.060.96-3.48-3.15

Gevo Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.97310.50580.21670.24960.35130.55260.44040.83641.07320.8933
GMI 1.88054.551810.83714.65981.77210.90440.77080.69280.80020.7944
AQI 1.87412.15461.96540.86581.0010.90260.87830.89840.78320.8446
SGI 2.42043.4375.95673.01111.58071.06620.91870.86310.88660.903
DEPI 0.82850.68930.58070.4890.59210.71860.87280.99610.97930.9624
SGAI 0.28570.20890.12630.24880.60230.85360.86520.86770.59520.5949
LVGI 1.45571.35291.31090.82641.02771.01510.96760.99470.89150.7203
TATA -0.0736-0.1295-0.1406-0.1266-0.1493-0.1164-0.1302-0.1021-0.0799-0.1007
M-score -0.810.966.150.04-2.84-3.48-3.83-3.41-2.98-3.15
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