Abu Dhabi National Insurance Co PJSC 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 Abu Dhabi National Insurance Co PJSC 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 * 0.0144 | + | 0.528 * 1 | + | 0.404 * 1.0823 | + | 0.892 * 1.0965 | + | 0.115 * 0.905 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 0 | + | 4.679 * 0.011145 | - | 0.327 * 0.0944 |
| = | -2.76 |
* 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 (Dec23) TTM: | Last Year (Dec22) TTM: |
Total Receivables was د.إ25 Mil.
Revenue was 569.779 + 551.316 + 563.183 + 438.793 = د.إ2,123 Mil.
Gross Profit was 569.779 + 551.316 + 563.183 + 438.793 = د.إ2,123 Mil.
Total Current Assets was د.إ2,590 Mil.
Total Assets was د.إ7,716 Mil.
Property, Plant and Equipment(Net PPE) was د.إ78 Mil.
Depreciation, Depletion and Amortization(DDA) was د.إ21 Mil.
Selling, General, & Admin. Expense(SGA) was د.إ0 Mil.
Total Current Liabilities was د.إ137 Mil.
Long-Term Debt & Capital Lease Obligation was د.إ0 Mil.
Net Income was 99.284 + 97.49 + 104.714 + 99.675 = د.إ401 Mil.
Non Operating Income was 5.589 + 3.707 + 2.7 + 3.566 = د.إ16 Mil.
Cash Flow from Operations was 1.458 + 319.235 + 53.445 + -74.536 = د.إ300 Mil.
|
Total Receivables was د.إ1,589 Mil.
Revenue was 520.647 + 477.999 + 467.792 + 469.859 = د.إ1,936 Mil.
Gross Profit was 520.647 + 477.999 + 467.792 + 469.859 = د.إ1,936 Mil.
Total Current Assets was د.إ3,866 Mil.
Total Assets was د.إ9,985 Mil.
Property, Plant and Equipment(Net PPE) was د.إ83 Mil.
Depreciation, Depletion and Amortization(DDA) was د.إ20 Mil.
Selling, General, & Admin. Expense(SGA) was د.إ88 Mil.
Total Current Liabilities was د.إ1,874 Mil.
Long-Term Debt & Capital Lease Obligation was د.إ0 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) |
| = | (25.097 / 2123.071) | / | (1588.673 / 1936.297) |
| = | 0.011821 | / | 0.82047 |
| | = | 0.0144 |
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) |
| = | (1936.297 / 1936.297) | / | (2123.071 / 2123.071) |
| = | 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 - (2589.767 + 77.598) / 7716.361) | / | (1 - (3866.103 + 82.75) / 9985.469) |
| = | 0.654323 | / | 0.60454 |
| | = | 1.0823 |
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 |
| = | 2123.071 | / | 1936.297 |
| | = | 1.0965 |
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)) |
| = | (20.018 / (20.018 + 82.75)) | / | (21.283 / (21.283 + 77.598)) |
| = | 0.194788 | / | 0.215239 |
| | = | 0.905 |
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) |
| = | (0 / 2123.071) | / | (87.88 / 1936.297) |
| = | 0 | / | 0.045386 |
| | = | 0 |
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) |
| = | ((0 + 136.795) / 7716.361) | / | ((0 + 1874.314) / 9985.469) |
| = | 0.017728 | / | 0.187704 |
| | = | 0.0944 |
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 |
| = | (401.163 - 15.562 | - | 299.602) | / | 7716.361 |
| | = | 0.011145 |
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.
Abu Dhabi National Insurance Co PJSC has a M-score of -2.76 suggests that the company is unlikely to be a manipulator.
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