Islami Bank Bangladesh 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 Islami Bank Bangladesh 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 * 1.1567 | + | 0.892 * 1.1594 | + | 0.115 * 1.1277 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 0.4482 | + | 4.679 * 0.122164 | - | 0.327 * 0.9451 |
| = | -1.58 |
* 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 BDT0 Mil.
Revenue was 11769.959 + 13713.72 + 11306.123 + 13709.29 = BDT50,499 Mil.
Gross Profit was 11769.959 + 13713.72 + 11306.123 + 13709.29 = BDT50,499 Mil.
Total Current Assets was BDT182,345 Mil.
Total Assets was BDT1,787,458 Mil.
Property, Plant and Equipment(Net PPE) was BDT21,198 Mil.
Depreciation, Depletion and Amortization(DDA) was BDT1,661 Mil.
Selling, General, & Admin. Expense(SGA) was BDT20 Mil.
Total Current Liabilities was BDT19,114 Mil.
Long-Term Debt & Capital Lease Obligation was BDT39,811 Mil.
Net Income was 571.221 + 1796.725 + 983.259 + 2550.224 = BDT5,901 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = BDT0 Mil.
Cash Flow from Operations was -83824.093 + -17597.318 + -52258.957 + -58781.742 = BDT-212,462 Mil.
|
Total Receivables was BDT0 Mil.
Revenue was 11423.609 + 9970.461 + 9524.402 + 12637.035 = BDT43,556 Mil.
Gross Profit was 11423.609 + 9970.461 + 9524.402 + 12637.035 = BDT43,556 Mil.
Total Current Assets was BDT373,922 Mil.
Total Assets was BDT1,681,878 Mil.
Property, Plant and Equipment(Net PPE) was BDT19,455 Mil.
Depreciation, Depletion and Amortization(DDA) was BDT1,737 Mil.
Selling, General, & Admin. Expense(SGA) was BDT39 Mil.
Total Current Liabilities was BDT17,248 Mil.
Long-Term Debt & Capital Lease Obligation was BDT41,420 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 / 50499.092) | / | (0 / 43555.507) |
| = | 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) |
| = | (43555.507 / 43555.507) | / | (50499.092 / 50499.092) |
| = | 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 - (182345.026 + 21198.258) / 1787457.742) | / | (1 - (373921.841 + 19454.689) / 1681878.154) |
| = | 0.886127 | / | 0.766109 |
| | = | 1.1567 |
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 |
| = | 50499.092 | / | 43555.507 |
| | = | 1.1594 |
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)) |
| = | (1736.857 / (1736.857 + 19454.689)) | / | (1661.387 / (1661.387 + 21198.258)) |
| = | 0.08196 | / | 0.072678 |
| | = | 1.1277 |
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) |
| = | (20.106 / 50499.092) | / | (38.671 / 43555.507) |
| = | 0.000398 | / | 0.000888 |
| | = | 0.4482 |
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) |
| = | ((39811.047 + 19114.178) / 1787457.742) | / | ((41419.879 + 17247.515) / 1681878.154) |
| = | 0.032966 | / | 0.034882 |
| | = | 0.9451 |
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 |
| = | (5901.429 - 0 | - | -212462.11) | / | 1787457.742 |
| | = | 0.122164 |
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.
Islami Bank Bangladesh has a M-score of -1.58 signals that the company is likely to be a manipulator.
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