Berry Global Group 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 Berry Global Group 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 * 0.8405 | + | 0.528 * 0.8724 | + | 0.404 * 0.9826 | + | 0.892 * 1.2373 | + | 0.115 * 0.8273 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 1.0126 | + | 4.679 * -0.0513 | - | 0.327 * 0.923 |
| = | -2.73 |
* All numbers are in millions except for per share data and ratio. All numbers are indicated in the company's associated stock exchange currency.
| This Year (Dec20) TTM: | Last Year (Dec19) TTM: |
Accounts Receivable was $1,456 Mil.
Revenue was 3136 + 3008 + 2910 + 2975 = $12,029 Mil.
Gross Profit was 618 + 666 + 638 + 584 = $2,506 Mil.
Total Current Assets was $3,983 Mil.
Total Assets was $17,176 Mil.
Property, Plant and Equipment(Net PPE) was $5,306 Mil.
Depreciation, Depletion and Amortization(DDA) was $844 Mil.
Selling, General, & Admin. Expense(SGA) was $862 Mil.
Total Current Liabilities was $2,295 Mil.
Long-Term Debt & Capital Lease Obligation was $10,481 Mil.
Net Income was 130 + 195 + 191 + 126 = $642 Mil.
Non Operating Income was -24 + -49 + -12 + -19 = $-104 Mil.
Cash Flow from Operations was 315 + 551 + 446 + 315 = $1,627 Mil.
|
Accounts Receivable was $1,400 Mil.
Revenue was 2816 + 3019 + 1937 + 1950 = $9,722 Mil.
Gross Profit was 520 + 497 + 378 + 372 = $1,767 Mil.
Total Current Assets was $3,673 Mil.
Total Assets was $17,024 Mil.
Property, Plant and Equipment(Net PPE) was $5,395 Mil.
Depreciation, Depletion and Amortization(DDA) was $691 Mil.
Selling, General, & Admin. Expense(SGA) was $688 Mil.
Total Current Liabilities was $2,077 Mil.
Long-Term Debt & Capital Lease Obligation was $11,642 Mil.
|
1. DSRI = Days Sales in Receivables Index
Measured as the ratio of Revenue in Accounts Receivable 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) |
| = | (1456 / 12029) | / | (1400 / 9722) |
| = | 0.12104082 | / | 0.14400329 |
| | = | 0.8405 |
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) |
| = | (1767 / 9722) | / | (2506 / 12029) |
| = | 0.18175273 | / | 0.20832987 |
| | = | 0.8724 |
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 - (3983 + 5306) / 17176) | / | (1 - (3673 + 5395) / 17024) |
| = | 0.45918724 | / | 0.46734023 |
| | = | 0.9826 |
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 |
| = | 12029 | / | 9722 |
| | = | 1.2373 |
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)) |
| = | (691 / (691 + 5395)) | / | (844 / (844 + 5306)) |
| = | 0.11353927 | / | 0.13723577 |
| | = | 0.8273 |
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) |
| = | (862 / 12029) | / | (688 / 9722) |
| = | 0.07166015 | / | 0.07076733 |
| | = | 1.0126 |
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) |
| = | ((10481 + 2295) / 17176) | / | ((11642 + 2077) / 17024) |
| = | 0.7438286 | / | 0.80586231 |
| | = | 0.923 |
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 |
| = | (642 - -104 | - | 1627) | / | 17176 |
| | = | -0.0513 |
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.
Berry Global Group has a M-score of -2.73 suggests that the company is unlikely to be a manipulator.
Excel Add-In GURUF
API
My Portfolios
Create New Portfolio
Portfolio Contest
My Gurus
Personalize
My Gurus
0.03(0.05%) Volume: 881,359 4:00PM EDT
Email Alerts
Stock PDF
RSS
Website
Filings
Manual of Stocks™ Web APP
BERY has been successfully added to your 
