Janashakthi Insurance Co 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 Janashakthi Insurance Co 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 * 0.3161 | + | 0.528 * 1 | + | 0.404 * 1.1587 | + | 0.892 * 2.0439 | + | 0.115 * 1.0393 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 0.0249 | + | 4.679 * 0.009512 | - | 0.327 * 3.1714 |
| = | -2.61 |
* 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 (Dec23) TTM: | Last Year (Dec22) TTM: |
Total Receivables was රු842 Mil.
Revenue was 2309.053 + 5558.904 + 3513.281 + 2279.562 = රු13,661 Mil.
Gross Profit was 2309.053 + 5558.904 + 3513.281 + 2279.562 = රු13,661 Mil.
Total Current Assets was රු5,445 Mil.
Total Assets was රු36,192 Mil.
Property, Plant and Equipment(Net PPE) was රු452 Mil.
Depreciation, Depletion and Amortization(DDA) was රු197 Mil.
Selling, General, & Admin. Expense(SGA) was රු45 Mil.
Total Current Liabilities was රු1,757 Mil.
Long-Term Debt & Capital Lease Obligation was රු2,968 Mil.
Net Income was 2106.944 + 1045.101 + 540.228 + 442.554 = රු4,135 Mil.
Non Operating Income was 6.391 + 6.269 + 2.476 + 13.945 = රු29 Mil.
Cash Flow from Operations was 1540.054 + 1164.817 + 221.871 + 834.747 = රු3,761 Mil.
|
Total Receivables was රු1,303 Mil.
Revenue was 2284.274 + 1526.044 + 1429.652 + 1443.664 = රු6,684 Mil.
Gross Profit was 2284.274 + 1526.044 + 1429.652 + 1443.664 = රු6,684 Mil.
Total Current Assets was රු6,594 Mil.
Total Assets was රු25,146 Mil.
Property, Plant and Equipment(Net PPE) was රු386 Mil.
Depreciation, Depletion and Amortization(DDA) was රු178 Mil.
Selling, General, & Admin. Expense(SGA) was රු887 Mil.
Total Current Liabilities was රු802 Mil.
Long-Term Debt & Capital Lease Obligation was රු233 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) |
| = | (842.033 / 13660.8) | / | (1303.244 / 6683.634) |
| = | 0.061639 | / | 0.19499 |
| | = | 0.3161 |
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) |
| = | (6683.634 / 6683.634) | / | (13660.8 / 13660.8) |
| = | 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 - (5445.433 + 452.275) / 36192.21) | / | (1 - (6594.061 + 385.939) / 25145.767) |
| = | 0.837045 | / | 0.722418 |
| | = | 1.1587 |
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 |
| = | 13660.8 | / | 6683.634 |
| | = | 2.0439 |
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)) |
| = | (177.787 / (177.787 + 385.939)) | / | (197.041 / (197.041 + 452.275)) |
| = | 0.315378 | / | 0.303459 |
| | = | 1.0393 |
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) |
| = | (45.226 / 13660.8) | / | (887.166 / 6683.634) |
| = | 0.003311 | / | 0.132737 |
| | = | 0.0249 |
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) |
| = | ((2967.526 + 1757.272) / 36192.21) | / | ((232.853 + 802.247) / 25145.767) |
| = | 0.130547 | / | 0.041164 |
| | = | 3.1714 |
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 |
| = | (4134.827 - 29.081 | - | 3761.489) | / | 36192.21 |
| | = | 0.009512 |
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.
Janashakthi Insurance Co has a M-score of -2.61 suggests that the company is unlikely to be a manipulator.
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