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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.
Sutor Technology Group Ltd has a M-score of -3.55 suggests that the company is not a manipulator.
During the past 11 years, the highest Beneish M-Score of Sutor Technology Group Ltd was 3.11. The lowest was -3.55. And the median was -1.77.
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 Sutor Technology Group 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 * 0.3552||+||0.528 * 0.8926||+||0.404 * 0.2555||+||0.892 * 0.9383||+||0.115 * 1.1803|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1033||+||4.679 * -0.0033||-||0.327 * 1.146|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $8.1 Mil.|
Revenue was 96.378 + 128.317 + 139.108 + 197.473 = $561.3 Mil.
Gross Profit was 7.323 + 13.626 + 12.203 + 13.246 = $46.4 Mil.
Total Current Assets was $553.1 Mil.
Total Assets was $653.8 Mil.
Property, Plant and Equipment(Net PPE) was $90.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.0 Mil.
Selling, General & Admin. Expense(SGA) was $18.5 Mil.
Total Current Liabilities was $392.3 Mil.
Long-Term Debt was $2.9 Mil.
Net Income was 1.114 + 6.395 + 5.188 + 6.418 = $19.1 Mil.
Non Operating Income was -0.661 + 0.1 + 0.099 + 0.454 = $-0.0 Mil.
Cash Flow from Operations was 16.289 + 3.022 + 11.839 + -9.837 = $21.3 Mil.
|Accounts Receivable was $24.2 Mil.
Revenue was 139.549 + 157.867 + 117.187 + 183.598 = $598.2 Mil.
Gross Profit was 10.933 + 12.209 + 8.547 + 12.452 = $44.1 Mil.
Total Current Assets was $373.3 Mil.
Total Assets was $474.9 Mil.
Property, Plant and Equipment(Net PPE) was $73.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $8.8 Mil.
Selling, General & Admin. Expense(SGA) was $17.8 Mil.
Total Current Liabilities was $248.2 Mil.
Long-Term Debt was $2.3 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)|
|=||(8.074 / 561.276)||/||(24.229 / 598.201)|
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)|
|=||(13.626 / 598.201)||/||(7.323 / 561.276)|
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 - (553.101 + 90.608) / 653.759)||/||(1 - (373.295 + 73.048) / 474.917)|
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))|
|=||(8.761 / (8.761 + 73.048))||/||(9.041 / (9.041 + 90.608))|
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)|
|=||(18.459 / 561.276)||/||(17.832 / 598.201)|
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)|
|=||((2.86 + 392.287) / 653.759)||/||((2.32 + 248.156) / 474.917)|
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|
|=||(19.115 - -0.008||-||21.313)||/||653.759|
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.
Sutor Technology Group Ltd has a M-score of -3.55 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
Sutor Technology Group Ltd Annual Data
Sutor Technology Group Ltd Quarterly Data