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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 8 years, the highest Beneish M-Score of SodaStream International Ltd was -1.70. The lowest was -2.97. And the median was -2.44.
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 SodaStream International Ltd 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 * 1.0067||+||0.528 * 1.0383||+||0.404 * 0.9957||+||0.892 * 0.8073||+||0.115 * 1.2216|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0047||+||4.679 * -0.085||-||0.327 * 0.8093|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $76.6 Mil.|
Revenue was 112.942 + 110.015 + 99.834 + 90.344 = $413.1 Mil.
Gross Profit was 52.033 + 50.76 + 48.527 + 45.451 = $196.8 Mil.
Total Current Assets was $253.8 Mil.
Total Assets was $452.7 Mil.
Property, Plant and Equipment(Net PPE) was $155.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $16.9 Mil.
Selling, General & Admin. Expense(SGA) was $181.0 Mil.
Total Current Liabilities was $90.5 Mil.
Long-Term Debt was $24.9 Mil.
Net Income was 2.828 + 2.242 + 0.96 + 6.047 = $12.1 Mil.
Non Operating Income was 5.584 + 0 + -0.684 + 5.634 = $10.5 Mil.
Cash Flow from Operations was 11.527 + 14.402 + 14.01 + 0.069 = $40.0 Mil.
|Accounts Receivable was $94.2 Mil.
Revenue was 126.526 + 125.905 + 141.171 + 118.172 = $511.8 Mil.
Gross Profit was 55.508 + 64.477 + 71.257 + 61.846 = $253.1 Mil.
Total Current Assets was $315.3 Mil.
Total Assets was $487.3 Mil.
Property, Plant and Equipment(Net PPE) was $124.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.0 Mil.
Selling, General & Admin. Expense(SGA) was $223.2 Mil.
Total Current Liabilities was $118.8 Mil.
Long-Term Debt was $34.6 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)|
|=||(76.566 / 413.135)||/||(94.217 / 511.774)|
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)|
|=||(50.76 / 511.774)||/||(52.033 / 413.135)|
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 - (253.803 + 155.294) / 452.729)||/||(1 - (315.313 + 124.817) / 487.298)|
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))|
|=||(17.047 / (17.047 + 124.817))||/||(16.943 / (16.943 + 155.294))|
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)|
|=||(181.041 / 413.135)||/||(223.218 / 511.774)|
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)|
|=||((24.905 + 90.496) / 452.729)||/||((34.645 + 118.832) / 487.298)|
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|
|=||(12.077 - 10.534||-||40.008)||/||452.729|
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.
SodaStream International Ltd has a M-score of -2.94 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
SodaStream International Ltd Annual Data
SodaStream International Ltd Quarterly Data