U.S. Bancorp 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 U.S. Bancorp 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 * 0.8402 | + | 0.528 * 1 | + | 0.404 * 1.0002 | + | 0.892 * 3.1162 | + | 0.115 * 0.8865 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 1.0491 | + | 4.679 * -0.002158 | - | 0.327 * 1.239 |
| = | -0.85 |
* 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 ARS7,834,021 Mil.
Revenue was 6494766.215 + 6123428.912 + 5632112.596 + 2429891.002 = ARS20,680,199 Mil.
Gross Profit was 6494766.215 + 6123428.912 + 5632112.596 + 2429891.002 = ARS20,680,199 Mil.
Total Current Assets was ARS0 Mil.
Total Assets was ARS652,488,756 Mil.
Property, Plant and Equipment(Net PPE) was ARS3,407,542 Mil.
Depreciation, Depletion and Amortization(DDA) was ARS718,192 Mil.
Selling, General, & Admin. Expense(SGA) was ARS8,548,067 Mil.
Total Current Liabilities was ARS0 Mil.
Long-Term Debt & Capital Lease Obligation was ARS52,124,467 Mil.
Net Income was 1629156.928 + 1435486.479 + 1111257.519 + 305767 = ARS4,481,668 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = ARS0 Mil.
Cash Flow from Operations was 923885.959 + 2573666.963 + 2241892.538 + 150176 = ARS5,889,621 Mil.
|
Total Receivables was ARS2,992,073 Mil.
Revenue was 2449650.067 + 1713839.986 + 1410704.583 + 1062230.371 = ARS6,636,425 Mil.
Gross Profit was 2449650.067 + 1713839.986 + 1410704.583 + 1062230.371 = ARS6,636,425 Mil.
Total Current Assets was ARS0 Mil.
Total Assets was ARS233,780,254 Mil.
Property, Plant and Equipment(Net PPE) was ARS1,265,419 Mil.
Depreciation, Depletion and Amortization(DDA) was ARS230,896 Mil.
Selling, General, & Admin. Expense(SGA) was ARS2,614,686 Mil.
Total Current Liabilities was ARS0 Mil.
Long-Term Debt & Capital Lease Obligation was ARS15,073,747 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) |
| = | (7834020.656 / 20680198.725) | / | (2992072.582 / 6636425.007) |
| = | 0.378817 | / | 0.450856 |
| | = | 0.8402 |
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) |
| = | (6636425.007 / 6636425.007) | / | (20680198.725 / 20680198.725) |
| = | 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 + 3407542.35) / 652488755.823) | / | (1 - (0 + 1265419.235) / 233780254.491) |
| = | 0.994778 | / | 0.994587 |
| | = | 1.0002 |
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 |
| = | 20680198.725 | / | 6636425.007 |
| | = | 3.1162 |
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)) |
| = | (230896.302 / (230896.302 + 1265419.235)) | / | (718192.49 / (718192.49 + 3407542.35)) |
| = | 0.15431 | / | 0.174076 |
| | = | 0.8865 |
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) |
| = | (8548066.888 / 20680198.725) | / | (2614685.773 / 6636425.007) |
| = | 0.413345 | / | 0.39399 |
| | = | 1.0491 |
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) |
| = | ((52124467.209 + 0) / 652488755.823) | / | ((15073746.715 + 0) / 233780254.491) |
| = | 0.079886 | / | 0.064478 |
| | = | 1.239 |
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 |
| = | (4481667.926 - 0 | - | 5889621.46) | / | 652488755.823 |
| | = | -0.002158 |
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.
U.S. Bancorp has a M-score of -0.85 signals that the company is likely to be a manipulator.
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