Meritz Fire & Marine Insurance Co 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 Meritz Fire & Marine Insurance Co 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 * 0.8949 | + | 0.528 * 1 | + | 0.404 * 1.0009 | + | 0.892 * 1.0782 | + | 0.115 * 0.9807 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 0.9602 | + | 4.679 * -0.063722 | - | 0.327 * 1.3043 |
| = | -2.90 |
* 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 (Sep22) TTM: | Last Year (Sep21) TTM: |
Total Receivables was ₩386,765 Mil.
Revenue was 2824171.346 + 2761727.731 + 2748765.13 + 2702408.297 = ₩11,037,073 Mil.
Gross Profit was 2824171.346 + 2761727.731 + 2748765.13 + 2702408.297 = ₩11,037,073 Mil.
Total Current Assets was ₩0 Mil.
Total Assets was ₩29,108,959 Mil.
Property, Plant and Equipment(Net PPE) was ₩747,202 Mil.
Depreciation, Depletion and Amortization(DDA) was ₩59,362 Mil.
Selling, General, & Admin. Expense(SGA) was ₩730,320 Mil.
Total Current Liabilities was ₩0 Mil.
Long-Term Debt & Capital Lease Obligation was ₩1,342,915 Mil.
Net Income was 259698.983 + 232289.979 + 214837.667 + 193605.935 = ₩900,433 Mil.
Non Operating Income was 242253.443 + 175038.767 + 96480.322 + 59463.327 = ₩573,236 Mil.
Cash Flow from Operations was 436407.466 + 1130384.923 + 657755.045 + -42479.519 = ₩2,182,068 Mil.
|
Total Receivables was ₩400,846 Mil.
Revenue was 2631136.298 + 2587471.491 + 2550912.99 + 2467313.152 = ₩10,236,834 Mil.
Gross Profit was 2631136.298 + 2587471.491 + 2550912.99 + 2467313.152 = ₩10,236,834 Mil.
Total Current Assets was ₩0 Mil.
Total Assets was ₩27,072,616 Mil.
Property, Plant and Equipment(Net PPE) was ₩718,441 Mil.
Depreciation, Depletion and Amortization(DDA) was ₩55,892 Mil.
Selling, General, & Admin. Expense(SGA) was ₩705,476 Mil.
Total Current Liabilities was ₩0 Mil.
Long-Term Debt & Capital Lease Obligation was ₩957,605 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) |
| = | (386765.002 / 11037072.504) | / | (400846.008 / 10236833.931) |
| = | 0.035042 | / | 0.039157 |
| | = | 0.8949 |
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) |
| = | (10236833.931 / 10236833.931) | / | (11037072.504 / 11037072.504) |
| = | 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 + 747201.629) / 29108959.319) | / | (1 - (0 + 718441.403) / 27072616.303) |
| = | 0.974331 | / | 0.973462 |
| | = | 1.0009 |
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 |
| = | 11037072.504 | / | 10236833.931 |
| | = | 1.0782 |
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)) |
| = | (55891.967 / (55891.967 + 718441.403)) | / | (59361.539 / (59361.539 + 747201.629)) |
| = | 0.072181 | / | 0.073598 |
| | = | 0.9807 |
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) |
| = | (730320.449 / 11037072.504) | / | (705475.533 / 10236833.931) |
| = | 0.06617 | / | 0.068915 |
| | = | 0.9602 |
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) |
| = | ((1342915 + 0) / 29108959.319) | / | ((957605 + 0) / 27072616.303) |
| = | 0.046134 | / | 0.035372 |
| | = | 1.3043 |
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 |
| = | (900432.564 - 573235.859 | - | 2182067.915) | / | 29108959.319 |
| | = | -0.063722 |
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.
Meritz Fire & Marine Insurance Co has a M-score of -2.90 suggests that the company is unlikely to be a manipulator.
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