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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 12 years, the highest Beneish M-Score of Gladstone Commercial Corp was -2.33. The lowest was -3.47. And the median was -2.48.
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 * 1.0099||+||0.404 * 1.1162||+||0.892 * 1.2023||+||0.115 * 0.8929|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0081||+||4.679 * -0.0483||-||0.327 * 0.9774|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $0.00 Mil.|
Revenue was 19.216 + 19.014 + 18.39 + 17.136 = $73.76 Mil.
Gross Profit was 18.339 + 17.812 + 17.088 + 15.806 = $69.05 Mil.
Total Current Assets was $44.97 Mil.
Total Assets was $787.79 Mil.
Property, Plant and Equipment(Net PPE) was $630.43 Mil.
Depreciation, Depletion and Amortization(DDA) was $28.86 Mil.
Selling, General & Admin. Expense(SGA) was $11.32 Mil.
Total Current Liabilities was $0.00 Mil.
Long-Term Debt was $502.60 Mil.
Net Income was 6.164 + 0.229 + 1.219 + -13.514 = $-5.90 Mil.
Non Operating Income was 4.651 + -0.649 + 0.581 + -0.639 = $3.94 Mil.
Cash Flow from Operations was 9.518 + 7.635 + 4.885 + 6.159 = $28.20 Mil.
|Accounts Receivable was $0.00 Mil.
Revenue was 16.861 + 16.19 + 14.258 + 14.035 = $61.34 Mil.
Gross Profit was 15.677 + 15.326 + 13.694 + 13.298 = $58.00 Mil.
Total Current Assets was $41.16 Mil.
Total Assets was $690.53 Mil.
Property, Plant and Equipment(Net PPE) was $561.11 Mil.
Depreciation, Depletion and Amortization(DDA) was $22.83 Mil.
Selling, General & Admin. Expense(SGA) was $9.34 Mil.
Total Current Liabilities was $3.72 Mil.
Long-Term Debt was $447.00 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 / 73.756)||/||(0 / 61.344)|
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)|
|=||(17.812 / 61.344)||/||(18.339 / 73.756)|
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 - (44.97 + 630.432) / 787.794)||/||(1 - (41.155 + 561.112) / 690.525)|
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))|
|=||(22.827 / (22.827 + 561.112))||/||(28.864 / (28.864 + 630.432))|
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)|
|=||(11.317 / 73.756)||/||(9.337 / 61.344)|
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)|
|=||((502.599 + 0) / 787.794)||/||((447.002 + 3.719) / 690.525)|
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|
|=||(-5.902 - 3.944||-||28.197)||/||787.794|
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 -2.48 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