Gramercy Property Trust 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 Gramercy Property Trust 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 * 1.3118 | + | 0.528 * 1 | + | 0.404 * 0.9257 | + | 0.892 * 1.6922 | + | 0.115 * 0.6528 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 0.7214 | + | 4.679 * -0.031749 | - | 0.327 * 0.9367 |
| = | -1.73 |
* 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 (Sep15) TTM: | Last Year (Sep14) TTM: |
Total Receivables was €24.90 Mil.
Revenue was 49.256 + 41.359 + 38.498 + -32.736 = €96.38 Mil.
Gross Profit was 49.256 + 41.359 + 38.498 + -32.736 = €96.38 Mil.
Total Current Assets was €0.00 Mil.
Total Assets was €2,184.49 Mil.
Property, Plant and Equipment(Net PPE) was €1,779.06 Mil.
Depreciation, Depletion and Amortization(DDA) was €72.87 Mil.
Selling, General, & Admin. Expense(SGA) was €16.76 Mil.
Total Current Liabilities was €0.00 Mil.
Long-Term Debt & Capital Lease Obligation was €889.16 Mil.
Net Income was 1.773 + -0.236 + 0.004 + -4.534 = €-2.99 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = €0.00 Mil.
Cash Flow from Operations was 25.329 + 17.045 + 17.041 + 6.948 = €66.36 Mil.
|
Total Receivables was €11.22 Mil.
Revenue was 22.869 + 12.392 + 9.572 + 12.12 = €56.95 Mil.
Gross Profit was 22.869 + 12.392 + 9.572 + 12.12 = €56.95 Mil.
Total Current Assets was €0.00 Mil.
Total Assets was €902.67 Mil.
Property, Plant and Equipment(Net PPE) was €721.69 Mil.
Depreciation, Depletion and Amortization(DDA) was €19.03 Mil.
Selling, General, & Admin. Expense(SGA) was €13.73 Mil.
Total Current Liabilities was €0.00 Mil.
Long-Term Debt & Capital Lease Obligation was €392.24 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) |
| = | (24.898 / 96.377) | / | (11.216 / 56.953) |
| = | 0.25834 | / | 0.196934 |
| | = | 1.3118 |
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) |
| = | (56.953 / 56.953) | / | (96.377 / 96.377) |
| = | 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 + 1779.061) / 2184.489) | / | (1 - (0 + 721.69) / 902.67) |
| = | 0.185594 | / | 0.200494 |
| | = | 0.9257 |
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 |
| = | 96.377 | / | 56.953 |
| | = | 1.6922 |
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)) |
| = | (19.027 / (19.027 + 721.69)) | / | (72.87 / (72.87 + 1779.061)) |
| = | 0.025687 | / | 0.039348 |
| | = | 0.6528 |
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) |
| = | (16.756 / 96.377) | / | (13.725 / 56.953) |
| = | 0.173859 | / | 0.240988 |
| | = | 0.7214 |
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) |
| = | ((889.156 + 0) / 2184.489) | / | ((392.24 + 0) / 902.67) |
| = | 0.407032 | / | 0.434533 |
| | = | 0.9367 |
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 |
| = | (-2.993 - 0 | - | 66.363) | / | 2184.489 |
| | = | -0.031749 |
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.
Gramercy Property Trust has a M-score of -1.73 signals that the company is likely to be a manipulator.
Gramercy Property Trust (FRA:GGU1) Business Description
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Gramercy Property Trust Inc, formerly Gramercy Capital Corporation was formed in April 2004 as a Maryland corporation and it completed the initial public offering in August 2004. The Company is a self-managed, integrated commercial real estate investment and asset management company. Its business is segmented into two segments - Realty/Corporate, Asset Management. The Realty/Corporate segment includes activities related to investment and ownership of commercial properties with credit grade tenants throughout the United States. The Realty/Corporate segment generates revenues from rental revenues from properties that kit owns. The Asset Management segment includes activities related to third-party asset and property management of commercial properties leased primarily to financial institutions and affiliated users throughout the United States. The Asset Management segment generates revenues from fee income related to the Management Agreement with KBS and from its Joint Venture with Garrison. As of December 31, 2012, the Company owned directly or in joint venture, a portfolio of 116 office and industrial buildings totaling approximately 4.9 million square feet, net leased on a long-term basis to tenants, including Bank of America, Nestlé Waters, Philips Electronics and others. Its asset and property management business operates under the name Gramercy Asset Management. It currently manages approximately $1.7 billion of commercial properties leased primarily to regulated financial institutions and affiliated users throughout the United States. Additionally, it has a commercial real estate finance business which operates under the name Gramercy Finance. It manages approximately $1.7 billion of whole loans, bridge loans, subordinate interests in whole loans, mezzanine loans, preferred equity and commercial mortgage-backed securities and other real estate securities which are financed through three non-recourse CDOs. It primarily competes with other REITs, specialty finance companies, insurance companies, mutual funds, hedge funds, institutional investors, investment banking firms, private equity firms, and other entities.
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