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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.
Gladstone Commercial Corp has a M-score of -2.45 suggests that the company is not a manipulator.
During the past 11 years, the highest Beneish M-Score of Gladstone Commercial Corp was 6.15. The lowest was -420.68. And the median was -2.64.
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 Gladstone Commercial Corp 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||+||0.528 * 1.0254||+||0.404 * 1.1501||+||0.892 * 1.2252||+||0.115 * 0.855|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0682||+||4.679 * -0.044||-||0.327 * 1.0195|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $0.00 Mil.|
Revenue was 19.014 + 18.39 + 17.136 + 16.861 = $71.40 Mil.
Gross Profit was 17.812 + 17.088 + 15.806 + 15.677 = $66.38 Mil.
Total Current Assets was $43.54 Mil.
Total Assets was $759.41 Mil.
Property, Plant and Equipment(Net PPE) was $607.17 Mil.
Depreciation, Depletion and Amortization(DDA) was $27.56 Mil.
Selling, General & Admin. Expense(SGA) was $12.56 Mil.
Total Current Liabilities was $8.96 Mil.
Long-Term Debt was $505.96 Mil.
Net Income was 0.229 + 1.219 + -13.514 + 0.333 = $-11.73 Mil.
Non Operating Income was -0.649 + 0.581 + -0.639 + -0.632 = $-1.34 Mil.
Cash Flow from Operations was 7.635 + 4.885 + 6.159 + 4.313 = $22.99 Mil.
|Accounts Receivable was $0.00 Mil.
Revenue was 16.19 + 14.258 + 14.035 + 13.792 = $58.28 Mil.
Gross Profit was 15.326 + 13.694 + 13.298 + 13.235 = $55.55 Mil.
Total Current Assets was $37.92 Mil.
Total Assets was $666.41 Mil.
Property, Plant and Equipment(Net PPE) was $545.56 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.03 Mil.
Selling, General & Admin. Expense(SGA) was $9.60 Mil.
Total Current Liabilities was $4.55 Mil.
Long-Term Debt was $438.66 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 / 71.401)||/||(0 / 58.275)|
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)|
|=||(17.088 / 58.275)||/||(17.812 / 71.401)|
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 - (43.542 + 607.173) / 759.407)||/||(1 - (37.921 + 545.558) / 666.412)|
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))|
|=||(21.033 / (21.033 + 545.558))||/||(27.56 / (27.56 + 607.173))|
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)|
|=||(12.562 / 71.401)||/||(9.598 / 58.275)|
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)|
|=||((505.958 + 8.955) / 759.407)||/||((438.662 + 4.551) / 666.412)|
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|
|=||(-11.733 - -1.339||-||22.992)||/||759.407|
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.
Gladstone Commercial Corp has a M-score of -2.45 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
Gladstone Commercial Corp Annual Data
Gladstone Commercial Corp Quarterly Data