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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 -420.30. And the median was -2.52.
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 * 1.0201||+||0.404 * 0.8869||+||0.892 * 1.0905||+||0.115 * 0.9017|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.6993||+||4.679 * -0.0311||-||0.327 * 1.0005|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $0.00 Mil.|
Revenue was 21.247 + 21.527 + 21.783 + 21.375 = $85.93 Mil.
Gross Profit was 19.813 + 19.917 + 20.239 + 19.763 = $79.73 Mil.
Total Current Assets was $42.73 Mil.
Total Assets was $818.29 Mil.
Property, Plant and Equipment(Net PPE) was $667.41 Mil.
Depreciation, Depletion and Amortization(DDA) was $36.47 Mil.
Selling, General & Admin. Expense(SGA) was $9.48 Mil.
Total Current Liabilities was $5.92 Mil.
Long-Term Debt was $526.72 Mil.
Net Income was 0.883 + 0.853 + 2.566 + -0.096 = $4.21 Mil.
Non Operating Income was -0.352 + -1.071 + -0.81 + -0.971 = $-3.20 Mil.
Cash Flow from Operations was 9.05 + 8.782 + 6.61 + 8.402 = $32.84 Mil.
|Accounts Receivable was $0.00 Mil.
Revenue was 20.688 + 19.88 + 19.216 + 19.014 = $78.80 Mil.
Gross Profit was 19.51 + 18.918 + 18.339 + 17.812 = $74.58 Mil.
Total Current Assets was $45.01 Mil.
Total Assets was $830.34 Mil.
Property, Plant and Equipment(Net PPE) was $661.59 Mil.
Depreciation, Depletion and Amortization(DDA) was $32.43 Mil.
Selling, General & Admin. Expense(SGA) was $12.43 Mil.
Total Current Liabilities was $7.70 Mil.
Long-Term Debt was $532.54 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)|
|=||(0 / 85.932)||/||(0 / 78.798)|
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)|
|=||(74.579 / 78.798)||/||(79.732 / 85.932)|
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 - (42.726 + 667.405) / 818.285)||/||(1 - (45.013 + 661.588) / 830.34)|
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))|
|=||(32.427 / (32.427 + 661.588))||/||(36.472 / (36.472 + 667.405))|
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)|
|=||(9.482 / 85.932)||/||(12.434 / 78.798)|
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)|
|=||((526.72 + 5.922) / 818.285)||/||((532.539 + 7.701) / 830.34)|
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|
|=||(4.206 - -3.204||-||32.844)||/||818.285|
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 -2.54 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