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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 13 years, the highest Beneish M-Score of Gladstone Commercial Corp was 6.68. The lowest was -420.29. And the median was -2.55.
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 * 1.0135||+||0.404 * 0.8556||+||0.892 * 1.0614||+||0.115 * 0.9429|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.777||+||4.679 * -0.0385||-||0.327 * 0.9517|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $0.00 Mil.|
Revenue was 21.589 + 21.247 + 21.527 + 21.783 = $86.15 Mil.
Gross Profit was 20.179 + 19.813 + 19.917 + 20.239 = $80.15 Mil.
Total Current Assets was $49.21 Mil.
Total Assets was $838.64 Mil.
Property, Plant and Equipment(Net PPE) was $671.87 Mil.
Depreciation, Depletion and Amortization(DDA) was $36.92 Mil.
Selling, General & Admin. Expense(SGA) was $9.59 Mil.
Total Current Liabilities was $6.71 Mil.
Long-Term Debt was $516.19 Mil.
Net Income was -0.073 + 0.883 + 0.853 + 2.566 = $4.23 Mil.
Non Operating Income was -0.152 + -0.352 + -1.071 + 1.69 = $0.12 Mil.
Cash Flow from Operations was 11.983 + 9.05 + 8.782 + 6.61 = $36.43 Mil.
|Accounts Receivable was $0.00 Mil.
Revenue was 21.375 + 20.688 + 19.88 + 19.216 = $81.16 Mil.
Gross Profit was 19.763 + 19.51 + 18.918 + 18.339 = $76.53 Mil.
Total Current Assets was $44.53 Mil.
Total Assets was $838.48 Mil.
Property, Plant and Equipment(Net PPE) was $656.58 Mil.
Depreciation, Depletion and Amortization(DDA) was $33.92 Mil.
Selling, General & Admin. Expense(SGA) was $11.62 Mil.
Total Current Liabilities was $10.94 Mil.
Long-Term Debt was $538.41 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 / 86.146)||/||(0 / 81.159)|
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)|
|=||(76.53 / 81.159)||/||(80.148 / 86.146)|
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 - (49.209 + 671.865) / 838.643)||/||(1 - (44.525 + 656.581) / 838.483)|
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))|
|=||(33.917 / (33.917 + 656.581))||/||(36.924 / (36.924 + 671.865))|
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)|
|=||(9.585 / 86.146)||/||(11.622 / 81.159)|
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)|
|=||((516.186 + 6.71) / 838.643)||/||((538.412 + 10.944) / 838.483)|
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|
|=||(4.229 - 0.115||-||36.425)||/||838.643|
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 -2.61 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