Emirates NBD PJSC 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 Emirates NBD PJSC 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 * 0.9762 | + | 0.892 * 1.3253 | + | 0.115 * 1.2327 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 0.9994 | + | 4.679 * 0.002495 | - | 0.327 * 1.1142 |
| = | -2.20 |
* 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 د.إ0 Mil.
Revenue was 10273.701 + 11431.995 + 10823.53 + 10455.863 = د.إ42,985 Mil.
Gross Profit was 10273.701 + 11431.995 + 10823.53 + 10455.863 = د.إ42,985 Mil.
Total Current Assets was د.إ189,268 Mil.
Total Assets was د.إ862,773 Mil.
Property, Plant and Equipment(Net PPE) was د.إ5,264 Mil.
Depreciation, Depletion and Amortization(DDA) was د.إ961 Mil.
Selling, General, & Admin. Expense(SGA) was د.إ7,643 Mil.
Total Current Liabilities was د.إ14,661 Mil.
Long-Term Debt & Capital Lease Obligation was د.إ70,789 Mil.
Net Income was 4021.05 + 5220.587 + 6226.327 + 6012.036 = د.إ21,480 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = د.إ0 Mil.
Cash Flow from Operations was -851.145 + -10346.916 + 3357.007 + 27168.054 = د.إ19,327 Mil.
|
Total Receivables was د.إ0 Mil.
Revenue was 9789.276 + 8487.771 + 7790.477 + 6366.218 = د.إ32,434 Mil.
Gross Profit was 9789.276 + 8487.771 + 7790.477 + 6366.218 = د.إ32,434 Mil.
Total Current Assets was د.إ149,153 Mil.
Total Assets was د.إ741,962 Mil.
Property, Plant and Equipment(Net PPE) was د.إ4,106 Mil.
Depreciation, Depletion and Amortization(DDA) was د.إ965 Mil.
Selling, General, & Admin. Expense(SGA) was د.إ5,770 Mil.
Total Current Liabilities was د.إ8,792 Mil.
Long-Term Debt & Capital Lease Obligation was د.إ57,159 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 / 42985.089) | / | (0 / 32433.742) |
| = | 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) |
| = | (32433.742 / 32433.742) | / | (42985.089 / 42985.089) |
| = | 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 - (189268 + 5264) / 862773) | / | (1 - (149153.349 + 4105.853) / 741961.553) |
| = | 0.774527 | / | 0.793441 |
| | = | 0.9762 |
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 |
| = | 42985.089 | / | 32433.742 |
| | = | 1.3253 |
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)) |
| = | (965 / (965 + 4105.853)) | / | (961 / (961 + 5264)) |
| = | 0.190303 | / | 0.154378 |
| | = | 1.2327 |
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) |
| = | (7642.901 / 42985.089) | / | (5770.329 / 32433.742) |
| = | 0.177804 | / | 0.177911 |
| | = | 0.9994 |
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) |
| = | ((70789 + 14661) / 862773) | / | ((57159.327 + 8792.335) / 741961.553) |
| = | 0.099041 | / | 0.088888 |
| | = | 1.1142 |
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 |
| = | (21480 - 0 | - | 19327) | / | 862773 |
| | = | 0.002495 |
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.
Emirates NBD PJSC has a M-score of -2.20 suggests that the company is unlikely to be a manipulator.
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