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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 -2.72 suggests that the company is not a manipulator.
During the past 12 years, the highest Beneish M-Score of Sutor Technology Group Ltd was 3.11. The lowest was -3.55. And the median was -1.80.
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 * 0.8205||+||0.528 * 1.1898||+||0.404 * 0.1782||+||0.892 * 0.48||+||0.115 * 1.1468|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.5275||+||4.679 * 0.1505||-||0.327 * 1.0191|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $3.9 Mil.|
Revenue was 37.988 + 41.613 + 96.378 + 128.317 = $304.3 Mil.
Gross Profit was -1.844 + 0.496 + 7.323 + 13.626 = $19.6 Mil.
Total Current Assets was $421.4 Mil.
Total Assets was $511.9 Mil.
Property, Plant and Equipment(Net PPE) was $85.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.0 Mil.
Selling, General & Admin. Expense(SGA) was $14.1 Mil.
Total Current Liabilities was $260.6 Mil.
Long-Term Debt was $11.0 Mil.
Net Income was -5.092 + -5.628 + 1.114 + 6.395 = $-3.2 Mil.
Non Operating Income was 0.207 + 0.235 + -0.661 + 0.1 = $-0.1 Mil.
Cash Flow from Operations was -58.238 + -41.207 + 16.289 + 3.022 = $-80.1 Mil.
|Accounts Receivable was $10.0 Mil.
Revenue was 139.108 + 197.473 + 139.549 + 157.867 = $634.0 Mil.
Gross Profit was 12.203 + 13.246 + 10.933 + 12.209 = $48.6 Mil.
Total Current Assets was $405.3 Mil.
Total Assets was $508.3 Mil.
Property, Plant and Equipment(Net PPE) was $72.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $8.9 Mil.
Selling, General & Admin. Expense(SGA) was $19.2 Mil.
Total Current Liabilities was $264.7 Mil.
Long-Term Debt was $0.0 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)|
|=||(3.939 / 304.296)||/||(10.002 / 633.997)|
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)|
|=||(0.496 / 633.997)||/||(-1.844 / 304.296)|
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 - (421.418 + 85.008) / 511.875)||/||(1 - (405.317 + 72.603) / 508.288)|
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))|
|=||(8.918 / (8.918 + 72.603))||/||(8.964 / (8.964 + 85.008))|
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)|
|=||(14.105 / 304.296)||/||(19.239 / 633.997)|
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 + 260.57) / 511.875)||/||((0 + 264.651) / 508.288)|
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|
|=||(-3.211 - -0.119||-||-80.134)||/||511.875|
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 -2.72 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