Riverview Bancorp Beneish M-Score Calculation
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski 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 Riverview Bancorp 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 * 1.0828 | + | 0.528 * 1 | + | 0.404 * 0.9996 | + | 0.892 * 0.8463 | + | 0.115 * 1.2074 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 1.2076 | + | 4.679 * -0.005944 | - | 0.327 * 2.3289 |
| = | -3.02 |
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
| This Year (Dec23) TTM: | Last Year (Dec22) TTM: |
Total Receivables was $5.25 Mil.
Revenue was 12.38 + 13.258 + 13.644 + 14.785 = $54.07 Mil.
Gross Profit was 12.38 + 13.258 + 13.644 + 14.785 = $54.07 Mil.
Total Current Assets was $239.26 Mil.
Total Assets was $1,590.62 Mil.
Property, Plant and Equipment(Net PPE) was $23.49 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.57 Mil.
Selling, General, & Admin. Expense(SGA) was $26.03 Mil.
Total Current Liabilities was $0.00 Mil.
Long-Term Debt & Capital Lease Obligation was $186.22 Mil.
Net Income was 1.452 + 2.472 + 2.843 + 2.983 = $9.75 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.00 Mil.
Cash Flow from Operations was 10.081 + 1.47 + 9.07 + -1.417 = $19.20 Mil.
|
Total Receivables was $5.73 Mil.
Revenue was 16.663 + 16.565 + 15.787 + 14.872 = $63.89 Mil.
Gross Profit was 16.663 + 16.565 + 15.787 + 14.872 = $63.89 Mil.
Total Current Assets was $242.02 Mil.
Total Assets was $1,598.73 Mil.
Property, Plant and Equipment(Net PPE) was $21.52 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.91 Mil.
Selling, General, & Admin. Expense(SGA) was $25.48 Mil.
Total Current Liabilities was $18.97 Mil.
Long-Term Debt & Capital Lease Obligation was $61.40 Mil.
|
1. DSRI = Days Sales in Receivables Index
Measured as the ratio of Revenue in Total 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) |
| = | (5.248 / 54.067) | / | (5.727 / 63.887) |
| = | 0.097065 | / | 0.089643 |
| | = | 1.0828 |
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) |
| = | (63.887 / 63.887) | / | (54.067 / 54.067) |
| = | 1 | / | 1 |
| | = | 1 |
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 Property, Plant and Equipment to Total Assets.
| AQI | = | (1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) | / | (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1) |
| = | (1 - (239.262 + 23.491) / 1590.623) | / | (1 - (242.019 + 21.518) / 1598.734) |
| = | 0.834811 | / | 0.835159 |
| | = | 0.9996 |
4. SGI = Sales Growth Index
Ratio of Revenue 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 |
| = | 54.067 | / | 63.887 |
| | = | 0.8463 |
5. DEPI = Depreciation Index
Measured as the ratio of the rate of Depreciation, Depletion and Amortization 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)) |
| = | (2.913 / (2.913 + 21.518)) | / | (2.574 / (2.574 + 23.491)) |
| = | 0.119234 | / | 0.098753 |
| | = | 1.2074 |
Note: If the Depreciation, Depletion and Amortization data is not available, we assume that the depreciation rate is constant and set the Depreciation Index to 1.
6. SGAI = Sales, General and Administrative expenses Index
The ratio of Selling, General, & Admin. Expense(SGA) to Sales 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) |
| = | (26.034 / 54.067) | / | (25.475 / 63.887) |
| = | 0.481514 | / | 0.398751 |
| | = | 1.2076 |
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 in leverage
| LVGI | = | ((LTD_t + CurrentLiabilities_t) / TotalAssets_t) | / | ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1) |
| = | ((186.22 + 0) / 1590.623) | / | ((61.403 + 18.966) / 1598.734) |
| = | 0.117074 | / | 0.05027 |
| | = | 2.3289 |
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 |
| = | (9.75 - 0 | - | 19.204) | / | 1590.623 |
| | = | -0.005944 |
An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator. An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.
Riverview Bancorp has a M-score of -3.02 suggests that the company is unlikely to be a manipulator.
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