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GuruFocus has detected 3 Warning Signs with Eldorado Gold Corp $EGO.
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Eldorado Gold Corp (NYSE:EGO)
Beneish M-Score
-3.75 (As of Today)

The zones of discrimination for M-Score is as such:

An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.

Eldorado Gold Corp has a M-score of -3.78 suggests that the company is not a manipulator.

EGO' s Beneish M-Score Range Over the Past 10 Years
Min: -15.05   Max: 15.34
Current: -3.75

-15.05
15.34

During the past 13 years, the highest Beneish M-Score of Eldorado Gold Corp was 15.34. The lowest was -15.05. And the median was -2.56.


Definition

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (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 Eldorado Gold Corp 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 * 0.6726+0.528 * 0.6686+0.404 * 0.1804+0.892 * 1.0211+0.115 * 0.9255
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1647+4.679 * -0.103-0.327 * 0.9708
=-3.78

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $52.1 Mil.
Revenue was 111.88 + 114.741 + 116.231 + 107.063 = $449.9 Mil.
Gross Profit was 43.128 + 43.244 + 49.123 + 41.633 = $177.1 Mil.
Total Current Assets was $1,098.3 Mil.
Total Assets was $4,821.2 Mil.
Property, Plant and Equipment(Net PPE) was $3,698.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $74.0 Mil.
Selling, General & Admin. Expense(SGA) was $80.1 Mil.
Total Current Liabilities was $104.4 Mil.
Long-Term Debt was $591.8 Mil.
Net Income was 3.834 + -32.549 + 20.74 + -329.864 = $-337.8 Mil.
Non Operating Income was 1.553 + -2.604 + 0.348 + 0.451 = $-0.3 Mil.
Cash Flow from Operations was 47.774 + 48.851 + 59.884 + 2.486 = $159.0 Mil.
Accounts Receivable was $75.9 Mil.
Revenue was 94.693 + 108.973 + 112.372 + 124.561 = $440.6 Mil.
Gross Profit was 29.172 + 20.65 + 29.976 + 36.182 = $116.0 Mil.
Total Current Assets was $520.5 Mil.
Total Assets was $5,450.6 Mil.
Property, Plant and Equipment(Net PPE) was $4,775.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $88.3 Mil.
Selling, General & Admin. Expense(SGA) was $67.3 Mil.
Total Current Liabilities was $220.9 Mil.
Long-Term Debt was $589.9 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in 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)
=(52.121 / 449.915) / (75.887 / 440.599)
=0.11584633 / 0.17223598
=0.6726

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)
=(115.98 / 440.599) / (177.128 / 449.915)
=0.26323255 / 0.39369214
=0.6686

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 plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (1098.345 + 3698.141) / 4821.163) / (1 - (520.451 + 4775.51) / 5450.64)
=0.00511847 / 0.02837814
=0.1804

4. SGI = Sales Growth Index

Ratio of sales 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
=449.915 / 440.599
=1.0211

5. DEPI = Depreciation Index

Measured as the ratio of the rate of depreciation 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))
=(88.285 / (88.285 + 4775.51)) / (73.983 / (73.983 + 3698.141))
=0.01815146 / 0.01961309
=0.9255

6. SGAI = Sales, General and Administrative expenses Index

The ratio of SGA expenses 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)
=(80.093 / 449.915) / (67.342 / 440.599)
=0.17801807 / 0.15284193
=1.1647

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$sgai= in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((591.845 + 104.397) / 4821.163) / ((589.944 + 220.875) / 5450.64)
=0.1444137 / 0.14875666
=0.9708

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
=(-337.839 - -0.252 - 158.995) / 4821.163
=-0.103

An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.

Eldorado Gold Corp has a M-score of -3.78 suggests that the company will not be a manipulator.


Related Terms

Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Eldorado Gold Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.4510.67050.6420.14230.69747.26420.41320.96741.49190.9247
GMI 0.74560.97781.07341.23830.83851.09941.1841.26971.30890.6999
AQI 0.1550.517811.68761.06010.94461.06030.71150.96820.33630.4711
SGI 2.24991.87511.14031.92291.39511.03970.97950.95010.54710.7407
DEPI 0.11180.82193.73040.43040.92632.17160.74260.88541.22321.1723
SGAI 0.6260.9570.75290.80240.91191.11350.98211.03311.59931.3233
LVGI 0.91020.27062.11620.82610.7431.63821.0890.9491.41810.9406
TATA -0.0416-0.0707-0.0302-0.0257-0.04980.0012-0.1362-0.024-0.3237-0.0947
M-score -2.55-2.311.52-2.39-2.663.31-3.75-2.54-4.27-3.61

Eldorado Gold Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.96740.94491.23981.30231.49192.15261.20941.42160.92470.6726
GMI 1.26971.20651.231.24521.30891.24661.07870.87270.69990.6686
AQI 0.96821.00081.02931.04450.33630.35320.21720.22650.47110.1804
SGI 0.95010.9630.83190.70560.54710.42930.47790.58150.74071.0211
DEPI 0.88540.92781.06241.17621.22321.58221.1281.09281.17230.9255
SGAI 1.03311.05571.05391.08671.59931.76321.90581.72541.32331.1647
LVGI 0.9490.96831.08431.07241.41811.4211.64321.54550.94060.9708
TATA -0.024-0.0306-0.0636-0.0743-0.3237-0.3097-0.3429-0.3261-0.0947-0.103
M-score -2.54-2.61-2.60-2.68-4.27-3.71-4.98-4.66-3.61-3.78
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