Sovereign Cloud Holdings (ASX:SOV) Beneish M-Score : -2.54 (As of May. 25, 2024)

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What is Sovereign Cloud Holdings Beneish M-Score?

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.

Good Sign:

Beneish M-Score -2.54 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

The historical rank and industry rank for Sovereign Cloud Holdings's Beneish M-Score or its related term are showing as below:

ASX:SOV' s Beneish M-Score Range Over the Past 10 Years
Min: -2.54 Med: -2.1 Max: -1.66
Current: -2.54

During the past 4 years, the highest Beneish M-Score of Sovereign Cloud Holdings was -1.66. The lowest was -2.54. And the median was -2.10.

Sovereign Cloud Holdings Beneish M-Score Historical Data

The historical data trend for Sovereign Cloud Holdings's Beneish M-Score can be seen below:

* 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.

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Sovereign Cloud Holdings Beneish M-Score Chart

Sovereign Cloud Holdings Annual Data

Trend

Jun20

Jun21

Jun22

Jun23

Beneish M-Score

-1.66

-2.54

Sovereign Cloud Holdings Semi-Annual Data
	Dec20	Jun21	Dec21	Jun22	Dec22	Jun23	Dec23
Beneish M-Score	Get a 7-Day Free Trial			-	-1.66	-	-2.54	-

Competitive Comparison of Sovereign Cloud Holdings's Beneish M-Score

For the Software - Infrastructure subindustry, Sovereign Cloud Holdings's Beneish M-Score, along with its competitors' market caps and Beneish M-Score data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

Sovereign Cloud Holdings's Beneish M-Score Distribution in the Software Industry

For the Software industry and Technology sector, Sovereign Cloud Holdings's Beneish M-Score distribution charts can be found below:

* The bar in red indicates where Sovereign Cloud Holdings's Beneish M-Score falls into.

Sovereign Cloud Holdings 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 Sovereign Cloud Holdings 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 * 1.268

0.528 * 1

0.404 * 0.7267

0.892 * 1.5271

0.115 * 0.9428

0.172 * SGAI

4.679 * TATA

0.327 * LVGI

0.172 * 0.9132

4.679 * -0.10992

0.327 * 1.5056

-2.54

This Year (Jun23) TTM:

Last Year (Jun22) TTM:

Total Receivables was A$1.07 Mil.
Revenue was A$6.48 Mil.
Gross Profit was A$6.48 Mil.
Total Current Assets was A$17.24 Mil.
Total Assets was A$33.94 Mil.
Property, Plant and Equipment(Net PPE) was A$15.82 Mil.
Depreciation, Depletion and Amortization(DDA) was A$5.39 Mil.
Selling, General, & Admin. Expense(SGA) was A$13.30 Mil.
Total Current Liabilities was A$5.26 Mil.
Long-Term Debt & Capital Lease Obligation was A$3.65 Mil.
Net Income was A$-21.28 Mil.
Gross Profit was A$0.21 Mil.
Cash Flow from Operations was A$-17.76 Mil.

Total Receivables was A$0.55 Mil.
Revenue was A$4.24 Mil.
Gross Profit was A$4.24 Mil.
Total Current Assets was A$30.93 Mil.
Total Assets was A$45.99 Mil.
Property, Plant and Equipment(Net PPE) was A$13.41 Mil.
Depreciation, Depletion and Amortization(DDA) was A$4.22 Mil.
Selling, General, & Admin. Expense(SGA) was A$9.53 Mil.
Total Current Liabilities was A$5.72 Mil.
Long-Term Debt & Capital Lease Obligation was A$2.30 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)
	=	(1.065 / 6.478)	/	(0.55 / 4.242)
	=	0.164403	/	0.129656
	=	1.268

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)
	=	(4.242 / 4.242)	/	(6.478 / 6.478)
	=	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 - (17.241 + 15.817) / 33.943)	/	(1 - (30.928 + 13.41) / 45.988)
	=	0.026073	/	0.035879
	=	0.7267

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
	=	6.478	/	4.242
	=	1.5271

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))
	=	(4.223 / (4.223 + 13.41))	/	(5.386 / (5.386 + 15.817))
	=	0.239494	/	0.254021
	=	0.9428

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)
	=	(13.295 / 6.478)	/	(9.534 / 4.242)
	=	2.052331	/	2.247525
	=	0.9132

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)
	=	((3.649 + 5.263) / 33.943)	/	((2.304 + 5.716) / 45.988)
	=	0.262558	/	0.174393
	=	1.5056

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
	=	(-21.283 - 0.21	-	-17.762)	/	33.943
	=	-0.10992

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.

Sovereign Cloud Holdings has a M-score of -2.54 suggests that the company is unlikely to be a manipulator.

Sovereign Cloud Holdings Beneish M-Score Related Terms

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Sovereign Cloud Holdings (ASX:SOV) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Software » Sovereign Cloud Holdings Ltd (ASX:SOV) » Definitions » Beneish M-Score

Comparable Companies

Traded in Other Exchanges

N/A

Address

15-21 Beaconsfield Street, Unit 7, Fyshwick, ACT, AUS, 2609

Website

https://www.australiacloud.com.au

Sovereign Cloud Holdings Ltd provides sovereign cloud services to Australian Governments and critical national industries. It has built a cloud-based platform, which is accredited by Government standards to PROTECTED controls or higher. The platform is available to rent computation cycles and data storage to customers on a pay-as-you-go basis, referred to as Infrastructure as a Service (IaaS).

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