Banner 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 Banner 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 * 1.1778 | + | 0.528 * 1 | + | 0.404 * 1.0015 | + | 0.892 * 0.9317 | + | 0.115 * 0.945 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 1.099 | + | 4.679 * -0.005956 | - | 0.327 * 1.1538 |
| = | -2.48 |
* 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 (Sep24) TTM: | Last Year (Sep23) TTM: |
Total Receivables was $67.0 Mil.
Revenue was 152.746 + 148.693 + 142.516 + 150.244 = $594.2 Mil.
Gross Profit was 152.746 + 148.693 + 142.516 + 150.244 = $594.2 Mil.
Total Current Assets was $0.0 Mil.
Total Assets was $16,188.7 Mil.
Property, Plant and Equipment(Net PPE) was $163.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.1 Mil.
Selling, General, & Admin. Expense(SGA) was $264.7 Mil.
Total Current Liabilities was $0.0 Mil.
Long-Term Debt & Capital Lease Obligation was $418.7 Mil.
Net Income was 45.153 + 39.795 + 37.559 + 42.624 = $165.1 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 63.753 + 78.688 + 51.466 + 67.647 = $261.6 Mil.
|
Total Receivables was $61.0 Mil.
Revenue was 153.75 + 150.728 + 161.402 + 171.909 = $637.8 Mil.
Gross Profit was 153.75 + 150.728 + 161.402 + 171.909 = $637.8 Mil.
Total Current Assets was $0.0 Mil.
Total Assets was $15,507.9 Mil.
Property, Plant and Equipment(Net PPE) was $180.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.8 Mil.
Selling, General, & Admin. Expense(SGA) was $258.6 Mil.
Total Current Liabilities was $0.0 Mil.
Long-Term Debt & Capital Lease Obligation was $347.7 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) |
| = | (66.981 / 594.199) | / | (61.04 / 637.789) |
| = | 0.112725 | / | 0.095706 |
| | = | 1.1778 |
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) |
| = | (637.789 / 637.789) | / | (594.199 / 594.199) |
| = | 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 + 163.448) / 16188.676) | / | (1 - (0 + 179.951) / 15507.88) |
| = | 0.989904 | / | 0.988396 |
| | = | 1.0015 |
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 |
| = | 594.199 | / | 637.789 |
| | = | 0.9317 |
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)) |
| = | (21.766 / (21.766 + 179.951)) | / | (21.069 / (21.069 + 163.448)) |
| = | 0.107904 | / | 0.114185 |
| | = | 0.945 |
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) |
| = | (264.734 / 594.199) | / | (258.561 / 637.789) |
| = | 0.445531 | / | 0.405402 |
| | = | 1.099 |
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) |
| = | ((418.745 + 0) / 16188.676) | / | ((347.674 + 0) / 15507.88) |
| = | 0.025867 | / | 0.022419 |
| | = | 1.1538 |
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 |
| = | (165.131 - 0 | - | 261.554) | / | 16188.676 |
| | = | -0.005956 |
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.
Banner has a M-score of -2.48 suggests that the company is unlikely to be a manipulator.
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