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Beneish M-Score 3.47 higher than -2.22, which implies that it might have manipulated its financial results.
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 Sutor Technology Group Ltd was 3.47. The lowest was -3.55. And the median was -1.79.
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 * 2.8376||+||0.528 * 5.3967||+||0.404 * 5.121||+||0.892 * 0.3314||+||0.115 * 0.9713|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.899||+||4.679 * 0.2094||-||0.327 * 0.8493|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $7.6 Mil.|
Revenue was 21.089 + 85.302 + 37.988 + 41.613 = $186.0 Mil.
Gross Profit was -1.075 + 5.272 + -1.844 + 0.496 = $2.8 Mil.
Total Current Assets was $370.2 Mil.
Total Assets was $491.9 Mil.
Property, Plant and Equipment(Net PPE) was $83.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $8.5 Mil.
Selling, General & Admin. Expense(SGA) was $11.6 Mil.
Total Current Liabilities was $241.5 Mil.
Long-Term Debt was $11.0 Mil.
Net Income was -2.552 + 0.027 + -5.092 + -5.628 = $-13.2 Mil.
Non Operating Income was -0.047 + -0.098 + 0.207 + 0.235 = $0.3 Mil.
Cash Flow from Operations was -0.291 + -16.83 + -58.238 + -41.207 = $-116.6 Mil.
|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.
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)|
|=||(7.592 / 185.992)||/||(8.074 / 561.276)|
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)|
|=||(5.272 / 561.276)||/||(-1.075 / 185.992)|
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 - (370.214 + 82.95) / 491.887)||/||(1 - (553.101 + 90.608) / 653.759)|
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))|
|=||(9.041 / (9.041 + 90.608))||/||(8.547 / (8.547 + 82.95))|
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)|
|=||(11.616 / 185.992)||/||(18.459 / 561.276)|
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)|
|=||((11.042 + 241.472) / 491.887)||/||((2.86 + 392.287) / 653.759)|
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|
|=||(-13.245 - 0.297||-||-116.566)||/||491.887|
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 3.47 signals that the company is likely to 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