Geneva Finance (NZSE:GFL) Beneish M-Score : -2.05 (As of May. 27, 2024)

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What is Geneva Finance Beneish M-Score?

Note: Financial institutions were excluded from the sample in Beneish paper when calculating Beneish M-Score. Thus, the prediction might not fit banks and insurance companies.

The zones of discrimination for M-Score is as such:

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.

Good Sign:

Beneish M-Score -2.05 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

The historical rank and industry rank for Geneva Finance's Beneish M-Score or its related term are showing as below:

NZSE:GFL' s Beneish M-Score Range Over the Past 10 Years
Min: -3.13 Med: -1.96 Max: -1.04
Current: -2.05

During the past 13 years, the highest Beneish M-Score of Geneva Finance was -1.04. The lowest was -3.13. And the median was -1.96.

Geneva Finance 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 Geneva Finance for today is based on a combination of the following eight different indices:

-4.84

0.92 * DSRI

0.528 * GMI

0.404 * AQI

0.892 * SGI

0.115 * DEPI

-4.84

0.92 * 0.9193

0.528 * 1

0.404 * 1.0021

0.892 * 1.2817

0.115 * 0.7924

0.172 * SGAI

4.679 * TATA

0.327 * LVGI

0.172 * 1

4.679 * 0.047569

0.327 * 0.84

-2.05

* 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 (Mar23) TTM:

Last Year (Mar22) TTM:

Total Receivables was NZ$123.57 Mil.
Revenue was NZ$44.20 Mil.
Gross Profit was NZ$44.20 Mil.
Total Current Assets was NZ$0.00 Mil.
Total Assets was NZ$174.46 Mil.
Property, Plant and Equipment(Net PPE) was NZ$0.24 Mil.
Depreciation, Depletion and Amortization(DDA) was NZ$0.67 Mil.
Selling, General, & Admin. Expense(SGA) was NZ$6.41 Mil.
Total Current Liabilities was NZ$0.00 Mil.
Long-Term Debt & Capital Lease Obligation was NZ$78.74 Mil.
Net Income was NZ$3.06 Mil.
Gross Profit was NZ$0.00 Mil.
Cash Flow from Operations was NZ$-5.24 Mil.

Total Receivables was NZ$104.88 Mil.
Revenue was NZ$34.49 Mil.
Gross Profit was NZ$34.49 Mil.
Total Current Assets was NZ$0.00 Mil.
Total Assets was NZ$155.65 Mil.
Property, Plant and Equipment(Net PPE) was NZ$0.54 Mil.
Depreciation, Depletion and Amortization(DDA) was NZ$0.76 Mil.
Selling, General, & Admin. Expense(SGA) was NZ$0.00 Mil.
Total Current Liabilities was NZ$0.00 Mil.
Long-Term Debt & Capital Lease Obligation was NZ$83.63 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)
	=	(123.565 / 44.199)	/	(104.879 / 34.486)
	=	2.795651	/	3.041205
	=	0.9193

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)
	=	(34.486 / 34.486)	/	(44.199 / 44.199)
	=	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 - (0 + 0.241) / 174.464)	/	(1 - (0 + 0.542) / 155.651)
	=	0.998619	/	0.996518
	=	1.0021

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
	=	44.199	/	34.486
	=	1.2817

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))
	=	(0.76 / (0.76 + 0.542))	/	(0.674 / (0.674 + 0.241))
	=	0.583717	/	0.736612
	=	0.7924

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)
	=	(6.405 / 44.199)	/	(0 / 34.486)
	=	0.144913	/	0
	=	1

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)
	=	((78.741 + 0) / 174.464)	/	((83.634 + 0) / 155.651)
	=	0.451331	/	0.537317
	=	0.84

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
	=	(3.055 - 0	-	-5.244)	/	174.464
	=	0.047569

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.

Geneva Finance has a M-score of -2.05 suggests that the company is unlikely to be a manipulator.

Geneva Finance Beneish M-Score Related Terms

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Geneva Finance (NZSE:GFL) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Credit Services » Geneva Finance Ltd (NZSE:GFL) » Definitions » Beneish M-Score

Comparable Companies

Traded in Other Exchanges

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Address

6B Pacific Rise, Mount Wellington, Panmure, Auckland, NZL, 1060

Website

https://www.genevafinance.co.nz

Geneva Finance Ltd is engaged in the provision of finance and financial services to the consumer credit markets. The company's operating segments are Corporate, New Business consumer finance, Insurance, Old Business consumer finance, Invoice Factoring, and Overseas. The New Business segment includes lending money to individuals, companies, and other entities. The Insurance segment issues temporary insurance contracts covering death, disablement, and redundancy risks and short-term motor vehicle contracts covering comprehensive, third-party, mechanical breakdown risk, and guaranteed asset protection. Its geographical segments are New Zealand and Tonga.