Insurance House PSC (ADX:IH) Beneish M-Score : -1.63 (As of Apr. 25, 2024)

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What is Insurance House PSC Beneish M-Score?

Note: Financial institutions were excluded from the sample in Beneish paper when calculating Beneish M-Score. Thus, the prediction might not fit banks and insurance companies.

The zones of discrimination for M-Score is as such:

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.

Warning Sign:

Beneish M-Score -1.63 higher than -1.78, which implies that the company might have manipulated its financial results.

The historical rank and industry rank for Insurance House PSC's Beneish M-Score or its related term are showing as below:

ADX:IH' s Beneish M-Score Range Over the Past 10 Years
Min: -3.49 Med: -2.12 Max: 2.37
Current: -1.63

During the past 11 years, the highest Beneish M-Score of Insurance House PSC was 2.37. The lowest was -3.49. And the median was -2.12.

Insurance House PSC 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 Insurance House PSC for today is based on a combination of the following eight different indices:

-4.84

0.92 * DSRI

0.528 * GMI

0.404 * AQI

0.892 * SGI

0.115 * DEPI

-4.84

0.92 * 0.0102

0.528 * 1

0.404 * 1.6927

0.892 * 1.255

0.115 * 1.0549

0.172 * SGAI

4.679 * TATA

0.327 * LVGI

0.172 * 0.1131

4.679 * 0.186375

0.327 * 0.3333

-1.63

* 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 (Sep23) TTM:

Last Year (Sep22) TTM:

Total Receivables was د.إ1.9 Mil.
Revenue was 25.688 + 28.174 + 39.725 + 88.475 = د.إ182.1 Mil.
Gross Profit was 25.688 + 28.174 + 39.725 + 88.475 = د.إ182.1 Mil.
Total Current Assets was د.إ45.7 Mil.
Total Assets was د.إ263.2 Mil.
Property, Plant and Equipment(Net PPE) was د.إ42.7 Mil.
Depreciation, Depletion and Amortization(DDA) was د.إ1.3 Mil.
Selling, General, & Admin. Expense(SGA) was د.إ3.3 Mil.
Total Current Liabilities was د.إ15.3 Mil.
Long-Term Debt & Capital Lease Obligation was د.إ0.0 Mil.
Net Income was -5.7 + -18.137 + -15.708 + 16.2 = د.إ-23.3 Mil.
Non Operating Income was 0 + 0 + 1.172 + 6.591 = د.إ7.8 Mil.
Cash Flow from Operations was -16.068 + -26.374 + -24.975 + -12.745 = د.إ-80.2 Mil.

Total Receivables was د.إ145.2 Mil.
Revenue was 28.112 + 29.858 + 44.216 + 42.887 = د.إ145.1 Mil.
Gross Profit was 28.112 + 29.858 + 44.216 + 42.887 = د.إ145.1 Mil.
Total Current Assets was د.إ255.2 Mil.
Total Assets was د.إ491.0 Mil.
Property, Plant and Equipment(Net PPE) was د.إ43.1 Mil.
Depreciation, Depletion and Amortization(DDA) was د.إ1.4 Mil.
Selling, General, & Admin. Expense(SGA) was د.إ22.9 Mil.
Total Current Liabilities was د.إ85.5 Mil.
Long-Term Debt & Capital Lease Obligation was د.إ0.0 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)
	=	(1.86 / 182.062)	/	(145.222 / 145.073)
	=	0.010216	/	1.001027
	=	0.0102

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)
	=	(145.073 / 145.073)	/	(182.062 / 182.062)
	=	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 - (45.692 + 42.699) / 263.201)	/	(1 - (255.204 + 43.13) / 490.983)
	=	0.664169	/	0.392374
	=	1.6927

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
	=	182.062	/	145.073
	=	1.255

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))
	=	(1.426 / (1.426 + 43.13))	/	(1.336 / (1.336 + 42.699))
	=	0.032005	/	0.03034
	=	1.0549

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)
	=	(3.255 / 182.062)	/	(22.933 / 145.073)
	=	0.017879	/	0.158079
	=	0.1131

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 + 15.274) / 263.201)	/	((0 + 85.49) / 490.983)
	=	0.058032	/	0.17412
	=	0.3333

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
	=	(-23.345 - 7.763	-	-80.162)	/	263.201
	=	0.186375

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.

Insurance House PSC has a M-score of -1.63 signals that the company is likely to be a manipulator.

Insurance House PSC Beneish M-Score Related Terms

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Insurance House PSC (ADX:IH) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Insurance » Insurance House PSC (ADX:IH) » Definitions » Beneish M-Score

Comparable Companies

Traded in Other Exchanges

N/A

Address

Finance House Building, Zayed 1st Street, P.O.Box 129921, Khalidiya Area, Abu Dhabi, ARE

Website

https://www.insurancehouse.ae

Insurance House PSC provides various non-life insurance products in the United Arab Emirates. The products and services offered by the company include accidents and civil responsibility insurance, land, marine and air transportation, dangers insurance and health insurance. The company is organized into two business segments comprising Underwriting of general insurance business and Investments. Underwriting of general insurance business segment incorporates all classes of general insurance, fire, marine, motor, general accident and medical. Investments segment incorporates investments in UAE marketable equity securities, term deposits with banks, overseas managed portfolios, and other securities.