Apollo Commercial Real Estate Finance 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 Apollo Commercial Real Estate Finance 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 * 1.1268 | + | 0.528 * 1 | + | 0.404 * 1 | + | 0.892 * 0.7469 | + | 0.115 * 1 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 1.3421 | + | 4.679 * -0.036365 | - | 0.327 * 5.0339 |
| = | -4.14 |
* 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 (Dec24) TTM: | Last Year (Dec23) TTM: |
Total Receivables was €55.8 Mil.
Revenue was 74.49 + -48.486 + 80.691 + 77.848 = €184.5 Mil.
Gross Profit was 74.49 + -48.486 + 80.691 + 77.848 = €184.5 Mil.
Total Current Assets was €0.0 Mil.
Total Assets was €8,033.1 Mil.
Property, Plant and Equipment(Net PPE) was €0.0 Mil.
Depreciation, Depletion and Amortization(DDA) was €10.8 Mil.
Selling, General, & Admin. Expense(SGA) was €27.5 Mil.
Total Current Liabilities was €0.0 Mil.
Long-Term Debt & Capital Lease Obligation was €6,102.6 Mil.
Net Income was 38.823 + -82.486 + 33.244 + -96.162 = €-106.6 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = €0.0 Mil.
Cash Flow from Operations was 47.685 + 42.56 + 46.679 + 48.616 = €185.5 Mil.
|
Total Receivables was €66.3 Mil.
Revenue was 76.563 + 72.971 + 15.709 + 81.834 = €247.1 Mil.
Gross Profit was 76.563 + 72.971 + 15.709 + 81.834 = €247.1 Mil.
Total Current Assets was €0.0 Mil.
Total Assets was €8,525.1 Mil.
Property, Plant and Equipment(Net PPE) was €0.0 Mil.
Depreciation, Depletion and Amortization(DDA) was €7.7 Mil.
Selling, General, & Admin. Expense(SGA) was €27.4 Mil.
Total Current Liabilities was €0.0 Mil.
Long-Term Debt & Capital Lease Obligation was €1,286.6 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) |
| = | (55.839 / 184.543) | / | (66.349 / 247.077) |
| = | 0.30258 | / | 0.268536 |
| | = | 1.1268 |
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) |
| = | (247.077 / 247.077) | / | (184.543 / 184.543) |
| = | 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 + 0) / 8033.069) | / | (1 - (0 + 0) / 8525.101) |
| = | 1 | / | 1 |
| | = | 1 |
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 |
| = | 184.543 | / | 247.077 |
| | = | 0.7469 |
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)) |
| = | (7.665 / (7.665 + 0)) | / | (10.795 / (10.795 + 0)) |
| = | 1 | / | 1 |
| | = | 1 |
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) |
| = | (27.454 / 184.543) | / | (27.387 / 247.077) |
| = | 0.148767 | / | 0.110844 |
| | = | 1.3421 |
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) |
| = | ((6102.644 + 0) / 8033.069) | / | ((1286.566 + 0) / 8525.101) |
| = | 0.75969 | / | 0.150915 |
| | = | 5.0339 |
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 |
| = | (-106.581 - 0 | - | 185.54) | / | 8033.069 |
| | = | -0.036365 |
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.
Apollo Commercial Real Estate Finance has a M-score of -4.14 suggests that the company is unlikely to be a manipulator.
Apollo Commercial Real Estate Finance Business Description
Traded in Other Exchanges
Address
c/o Apollo Global Management, Inc, 9 West 57th Street, 42nd Floor, New York, NY, USA, 10019
Apollo Commercial Real Estate Finance Inc is a real estate investment trust that primarily originates, invests in, acquires, and manages commercial first-mortgage loans, subordinate financings, commercial mortgage-backed securities, and other real estate-related debt investments. The subordinate loans and first-mortgage loans account for the vast majority of the portfolio on a cost basis. Property types include residential, retail, healthcare, office, mixed-use, hotel, industrial, multifamily, securities, and other, with residential properties and hotels representing the highest property value. More than a third of the properties are located in New York City, with the other properties located across other regions of the United States, as well as other countries.
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