AU Small Finance Bank 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 AU Small Finance Bank 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 | + | 0.528 * 1 | + | 0.404 * 0.9804 | + | 0.892 * 1.2913 | + | 0.115 * 0.9173 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 1.648 | + | 4.679 * -0.045066 | - | 0.327 * 0.8167 |
| = | -2.50 |
* 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 (Mar23) TTM: | Last Year (Mar22) TTM: |
Total Receivables was ₹0 Mil.
Revenue was ₹54,604 Mil.
Gross Profit was ₹54,604 Mil.
Total Current Assets was ₹94,781 Mil.
Total Assets was ₹902,161 Mil.
Property, Plant and Equipment(Net PPE) was ₹7,401 Mil.
Depreciation, Depletion and Amortization(DDA) was ₹1,854 Mil.
Selling, General, & Admin. Expense(SGA) was ₹5,318 Mil.
Total Current Liabilities was ₹5,595 Mil.
Long-Term Debt & Capital Lease Obligation was ₹62,987 Mil.
Net Income was ₹14,279 Mil.
Gross Profit was ₹0 Mil.
Cash Flow from Operations was ₹54,936 Mil.
|
Total Receivables was ₹0 Mil.
Revenue was ₹42,285 Mil.
Gross Profit was ₹42,285 Mil.
Total Current Assets was ₹59,765 Mil.
Total Assets was ₹690,778 Mil.
Property, Plant and Equipment(Net PPE) was ₹6,226 Mil.
Depreciation, Depletion and Amortization(DDA) was ₹1,402 Mil.
Selling, General, & Admin. Expense(SGA) was ₹2,499 Mil.
Total Current Liabilities was ₹4,390 Mil.
Long-Term Debt & Capital Lease Obligation was ₹59,908 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) |
| = | (0 / 54604.092) | / | (0 / 42284.557) |
| = | 0 | / | 0 |
| | = | 1 |
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) |
| = | (42284.557 / 42284.557) | / | (54604.092 / 54604.092) |
| = | 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 - (94781.102 + 7401.394) / 902161.184) | / | (1 - (59765.016 + 6225.713) / 690778.004) |
| = | 0.886736 | / | 0.904469 |
| | = | 0.9804 |
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 |
| = | 54604.092 | / | 42284.557 |
| | = | 1.2913 |
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)) |
| = | (1401.666 / (1401.666 + 6225.713)) | / | (1854.177 / (1854.177 + 7401.394)) |
| = | 0.183768 | / | 0.200331 |
| | = | 0.9173 |
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) |
| = | (5318.374 / 54604.092) | / | (2499.028 / 42284.557) |
| = | 0.097399 | / | 0.0591 |
| | = | 1.648 |
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) |
| = | ((62986.521 + 5595.49) / 902161.184) | / | ((59907.786 + 4390.178) / 690778.004) |
| = | 0.07602 | / | 0.093081 |
| | = | 0.8167 |
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 |
| = | (14279.253 - 0 | - | 54936.398) | / | 902161.184 |
| | = | -0.045066 |
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.
AU Small Finance Bank has a M-score of -2.50 suggests that the company is unlikely to be a manipulator.
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