Switch to:
GuruFocus has detected 7 Warning Signs with Sothebys $BID.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Sothebys (NYSE:BID)
Beneish M-Score
-3.39 (As of Today)

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

An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.

Sothebys has a M-score of -3.39 suggests that the company is not a manipulator.

BID' s Beneish M-Score Range Over the Past 10 Years
Min: -3.52   Max: -1.1
Current: -3.39

-3.52
-1.1

During the past 13 years, the highest Beneish M-Score of Sothebys was -1.10. The lowest was -3.52. And the median was -2.47.


Definition

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (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 Sothebys 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 * 0.8052+0.528 * 1.0365+0.404 * 1.0247+0.892 * 0.9715+0.115 * 0.9063
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9655+4.679 * -0.1487-0.327 * 1.098
=-3.39

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $392.0 Mil.
Revenue was 187.537 + 308.689 + 91.492 + 298.665 = $886.4 Mil.
Gross Profit was 101.576 + 242.484 + 52.301 + 255.888 = $652.2 Mil.
Total Current Assets was $1,254.4 Mil.
Total Assets was $2,417.0 Mil.
Property, Plant and Equipment(Net PPE) was $346.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.9 Mil.
Selling, General & Admin. Expense(SGA) was $488.6 Mil.
Total Current Liabilities was $699.4 Mil.
Long-Term Debt was $1,145.8 Mil.
Net Income was -11.325 + 65.502 + -54.47 + 88.964 = $88.7 Mil.
Non Operating Income was 0.84 + 2.08 + 0.633 + 0.374 = $3.9 Mil.
Cash Flow from Operations was -17.5 + 258.22 + -52.743 + 256.131 = $444.1 Mil.
Accounts Receivable was $501.1 Mil.
Revenue was 106.531 + 335.821 + 137.992 + 332.006 = $912.4 Mil.
Gross Profit was 81.86 + 253.681 + 81.876 + 278.413 = $695.8 Mil.
Total Current Assets was $1,267.5 Mil.
Total Assets was $2,414.0 Mil.
Property, Plant and Equipment(Net PPE) was $350.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $20.0 Mil.
Selling, General & Admin. Expense(SGA) was $520.9 Mil.
Total Current Liabilities was $554.1 Mil.
Long-Term Debt was $1,124.4 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in 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)
=(392.022 / 886.383) / (501.136 / 912.35)
=0.44227157 / 0.54928043
=0.8052

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)
=(695.83 / 912.35) / (652.249 / 886.383)
=0.7626788 / 0.73585459
=1.0365

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 plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (1254.427 + 346.231) / 2416.996) / (1 - (1267.515 + 350.775) / 2413.997)
=0.33774901 / 0.3296222
=1.0247

4. SGI = Sales Growth Index

Ratio of sales 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
=886.383 / 912.35
=0.9715

5. DEPI = Depreciation Index

Measured as the ratio of the rate of depreciation 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))
=(19.995 / (19.995 + 350.775)) / (21.905 / (21.905 + 346.231))
=0.05392831 / 0.05950247
=0.9063

6. SGAI = Sales, General and Administrative expenses Index

The ratio of SGA expenses 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)
=(488.593 / 886.383) / (520.888 / 912.35)
=0.55122109 / 0.57093002
=0.9655

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$sgai= in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((1145.842 + 699.437) / 2416.996) / ((1124.409 + 554.086) / 2413.997)
=0.76345968 / 0.69531777
=1.098

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
=(88.671 - 3.927 - 444.108) / 2416.996
=-0.1487

An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.

Sothebys has a M-score of -3.39 suggests that the company will not be a manipulator.


Related Terms

Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Sothebys Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.55150.86470.97911.14260.75571.16841.22431.02330.93450.5914
GMI 1.04291.11190.89830.96711.00141.00091.0251.04781.06920.9835
AQI 0.83711.20321.12851.04570.85661.46950.91171.24511.05021.4487
SGI 1.38040.75360.70131.59671.07430.92391.11081.09881.0250.8376
DEPI 1.11750.84091.9541.29860.93480.99290.93690.91171.0260.881
SGAI 0.92611.15391.12790.75531.03971.09370.98320.90171.03971.1244
LVGI 0.92750.92520.98011.02890.96090.96520.99671.21071.03521.0605
TATA 0.11330.12-0.1057-0.0814-0.09540.0721-0.03820.0234-0.0337-0.0349
M-score -1.10-2.14-3.17-2.13-3.14-1.87-2.38-2.20-2.63-3.05

Sothebys Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.02330.88340.83410.51450.93451.08061.07792.12030.59140.8052
GMI 1.04781.01131.02711.08421.06921.09481.07181.01990.98351.0365
AQI 1.24511.47071.30961.1831.05020.96320.98370.98791.44871.0247
SGI 1.09881.0310.9931.05491.0250.97380.9420.85220.83760.9715
DEPI 0.91170.94740.97861.00641.0260.99220.94170.90870.8810.9063
SGAI 0.90170.96671.01060.96451.03971.10071.02021.16491.12440.9655
LVGI 1.21071.05650.98021.03891.03521.11361.13461.13821.06051.098
TATA 0.02340.03780.025-0.0256-0.0337-0.0485-0.0502-0.0669-0.0349-0.1487
M-score -2.20-2.21-2.38-2.88-2.63-2.68-2.72-1.97-3.05-3.39
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK