Stellus Capital Investment (FRA:GO0) Beneish M-Score : -0.97 (As of Dec. 15, 2024)

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What is Stellus Capital Investment Beneish M-Score?

Note: Financial institutions were excluded from the sample in Beneish paper when calculating Beneish M-Score. Thus, the prediction might not fit banks and insurance companies.

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

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.

Warning Sign:

Beneish M-Score -0.97 higher than -1.78, which implies that the company might have manipulated its financial results.

The historical rank and industry rank for Stellus Capital Investment's Beneish M-Score or its related term are showing as below:

FRA:GO0' s Beneish M-Score Range Over the Past 10 Years
Min: -2.72 Med: -1.79 Max: 0.88
Current: -0.97

During the past 12 years, the highest Beneish M-Score of Stellus Capital Investment was 0.88. The lowest was -2.72. And the median was -1.79.

Stellus Capital Investment 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 Stellus Capital Investment for today is based on a combination of the following eight different indices:

-4.84

0.92 * DSRI

0.528 * GMI

0.404 * AQI

0.892 * SGI

0.115 * DEPI

-4.84

0.92 * 0.3951

0.528 * 1

0.404 * 1

0.892 * 2.9953

0.115 * 1

0.172 * SGAI

4.679 * TATA

0.327 * LVGI

0.172 * 0.3667

4.679 * 0.021915

0.327 * 0.9445

-1.03

* 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 (Sep24) TTM:

Last Year (Sep23) TTM:

Total Receivables was €6.94 Mil.
Revenue was 15.512 + 7.883 + 13.775 + 9.117 = €46.29 Mil.
Gross Profit was 15.512 + 7.883 + 13.775 + 9.117 = €46.29 Mil.
Total Current Assets was €0.00 Mil.
Total Assets was €862.32 Mil.
Property, Plant and Equipment(Net PPE) was €0.00 Mil.
Depreciation, Depletion and Amortization(DDA) was €0.00 Mil.
Selling, General, & Admin. Expense(SGA) was €5.28 Mil.
Total Current Liabilities was €0.00 Mil.
Long-Term Debt & Capital Lease Obligation was €518.05 Mil.
Net Income was 13.93 + 7.937 + 12.096 + 10.53 = €44.49 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = €0.00 Mil.
Cash Flow from Operations was 10.588 + -12.174 + 4.1 + 23.081 = €25.60 Mil.

Total Receivables was €5.86 Mil.
Revenue was -0.693 + 4.964 + 6.207 + 4.975 = €15.45 Mil.
Gross Profit was -0.693 + 4.964 + 6.207 + 4.975 = €15.45 Mil.
Total Current Assets was €0.00 Mil.
Total Assets was €854.50 Mil.
Property, Plant and Equipment(Net PPE) was €0.00 Mil.
Depreciation, Depletion and Amortization(DDA) was €0.00 Mil.
Selling, General, & Admin. Expense(SGA) was €4.80 Mil.
Total Current Liabilities was €0.00 Mil.
Long-Term Debt & Capital Lease Obligation was €543.49 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)
	=	(6.937 / 46.287)	/	(5.861 / 15.453)
	=	0.149869	/	0.379279
	=	0.3951

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)
	=	(15.453 / 15.453)	/	(46.287 / 46.287)
	=	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) / 862.322)	/	(1 - (0 + 0) / 854.501)
	=	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
	=	46.287	/	15.453
	=	2.9953

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))
	=	(0 / (0 + 0))	/	(0 / (0 + 0))
	=		/
	=	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)
	=	(5.276 / 46.287)	/	(4.803 / 15.453)
	=	0.113984	/	0.310813
	=	0.3667

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)
	=	((518.046 + 0) / 862.322)	/	((543.49 + 0) / 854.501)
	=	0.600757	/	0.636032
	=	0.9445

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
	=	(44.493 - 0	-	25.595)	/	862.322
	=	0.021915

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.

Stellus Capital Investment has a M-score of -1.03 signals that the company is likely to be a manipulator.

Stellus Capital Investment Beneish M-Score Related Terms

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Stellus Capital Investment Business Description

Industry

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SCM:USA

Address

4400 Post Oak Parkway, Suite 2200, Houston, TX, USA, 77027

Website

https://www.stelluscapital.com

Stellus Capital Investment Corp is a closed-end, non-diversified management investment company. Its objective is to maximize the total return to its stockholders in the form of current income and capital appreciation. It invests in private middle-market companies through a first lien, second lien, and unsecured debt financing, often with a corresponding equity investment. The company invests in various sectors, such as business services, energy, general industrial, government services, healthcare, software, and specialty finance. Business activity of the firm is functioned through the United States and it generates revenue in the form of interest income on debt investments and capital gains and distributions.