Citigroup 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 Citigroup 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 * 0.5265 | + | 0.528 * 1 | + | 0.404 * 1 | + | 0.892 * 2.2524 | + | 0.115 * 0.6782 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 0.9274 | + | 4.679 * 0.029822 | - | 0.327 * 0.9797 |
| = | -1.68 |
* 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 (Mar25) TTM: | Last Year (Mar24) TTM: |
Total Receivables was ARS61,527,388 Mil.
Revenue was 23027463.883 + 19781860.198 + 19261881.653 + 18038951.742 = ARS80,110,157 Mil.
Gross Profit was 23027463.883 + 19781860.198 + 19261881.653 + 18038951.742 = ARS80,110,157 Mil.
Total Current Assets was ARS0 Mil.
Total Assets was ARS2,741,328,909 Mil.
Property, Plant and Equipment(Net PPE) was ARS32,848,862 Mil.
Depreciation, Depletion and Amortization(DDA) was ARS4,161,965 Mil.
Selling, General, & Admin. Expense(SGA) was ARS29,018,706 Mil.
Total Current Liabilities was ARS0 Mil.
Long-Term Debt & Capital Lease Obligation was ARS315,210,066 Mil.
Net Income was 4332374.113 + 2884560.029 + 3077718.865 + 2880823.459 = ARS13,175,476 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = ARS0 Mil.
Cash Flow from Operations was -62584896.517 + 25043960.25 + -15848636.303 + -15187679.783 = ARS-68,577,252 Mil.
|
Total Receivables was ARS51,887,891 Mil.
Revenue was 17697555.301 + 6295840.006 + 6907663.24 + 4665599.963 = ARS35,566,659 Mil.
Gross Profit was 17697555.301 + 6295840.006 + 6907663.24 + 4665599.963 = ARS35,566,659 Mil.
Total Current Assets was ARS0 Mil.
Total Assets was ARS2,049,389,710 Mil.
Property, Plant and Equipment(Net PPE) was ARS24,590,890 Mil.
Depreciation, Depletion and Amortization(DDA) was ARS2,030,200 Mil.
Selling, General, & Admin. Expense(SGA) was ARS13,891,785 Mil.
Total Current Liabilities was ARS0 Mil.
Long-Term Debt & Capital Lease Obligation was ARS240,529,542 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) |
| = | (61527387.875 / 80110157.476) | / | (51887890.882 / 35566658.51) |
| = | 0.768035 | / | 1.458891 |
| | = | 0.5265 |
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) |
| = | (35566658.51 / 35566658.51) | / | (80110157.476 / 80110157.476) |
| = | 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 + 32848862.187) / 2741328908.854) | / | (1 - (0 + 24590890.418) / 2049389709.84) |
| = | 0.988017 | / | 0.988001 |
| | = | 1 |
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 |
| = | 80110157.476 | / | 35566658.51 |
| | = | 2.2524 |
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)) |
| = | (2030199.975 / (2030199.975 + 24590890.418)) | / | (4161964.735 / (4161964.735 + 32848862.187)) |
| = | 0.076263 | / | 0.112453 |
| | = | 0.6782 |
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) |
| = | (29018706.346 / 80110157.476) | / | (13891784.526 / 35566658.51) |
| = | 0.362235 | / | 0.390584 |
| | = | 0.9274 |
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) |
| = | ((315210065.777 + 0) / 2741328908.854) | / | ((240529541.589 + 0) / 2049389709.84) |
| = | 0.114984 | / | 0.117366 |
| | = | 0.9797 |
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 |
| = | (13175476.466 - 0 | - | -68577252.353) | / | 2741328908.854 |
| | = | 0.029822 |
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.
Citigroup has a M-score of -1.68 signals that the company is likely to be a manipulator.
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