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# UMB Financial (FRA:UMB) Beneish M-Score

: -2.22 (As of Today)
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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.

Good Sign:

Beneish M-Score -2.22 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

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

FRA:UMB' s Beneish M-Score Range Over the Past 10 Years
Min: -4.05   Med: -2.42   Max: -1.3
Current: -2.22

During the past 13 years, the highest Beneish M-Score of UMB Financial was -1.30. The lowest was -4.05. And the median was -2.42.

## UMB Financial 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 UMB Financial 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 * 1.0051 + 0.528 * 1 + 0.404 * 1.5509 + 0.892 * 1.2719 + 0.115 * 0.9646 - 0.172 * SGAI + 4.679 * TATA - 0.327 * LVGI - 0.172 * 0.926 + 4.679 * -0.008926 - 0.327 * 1.3211 = -2.15

* 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 (Dec22) TTM: Last Year (Dec21) TTM: Total Receivables was €465 Mil. Revenue was 320.723 + 338.104 + 355.609 + 280.593 = €1,295 Mil. Gross Profit was 320.723 + 338.104 + 355.609 + 280.593 = €1,295 Mil. Total Current Assets was €8,665 Mil. Total Assets was €36,356 Mil. Property, Plant and Equipment(Net PPE) was €249 Mil. Depreciation, Depletion and Amortization(DDA) was €51 Mil. Selling, General, & Admin. Expense(SGA) was €552 Mil. Total Current Liabilities was €226 Mil. Long-Term Debt & Capital Lease Obligation was €360 Mil. Net Income was 94.563 + 88.87 + 130.128 + 96.214 = €410 Mil. Non Operating Income was 0 + 0 + 0 + 0 = €0 Mil. Cash Flow from Operations was 136.356 + 221.493 + 198.43 + 178.015 = €734 Mil. Total Receivables was €364 Mil. Revenue was 270.283 + 251.868 + 258.653 + 237.417 = €1,018 Mil. Gross Profit was 270.283 + 251.868 + 258.653 + 237.417 = €1,018 Mil. Total Current Assets was €19,154 Mil. Total Assets was €37,784 Mil. Property, Plant and Equipment(Net PPE) was €240 Mil. Depreciation, Depletion and Amortization(DDA) was €47 Mil. Selling, General, & Admin. Expense(SGA) was €468 Mil. Total Current Liabilities was €221 Mil. Long-Term Debt & Capital Lease Obligation was €240 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) = (465.216 / 1295.028) / (363.908 / 1018.22) = 0.359233 / 0.357396 = 1.0051

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) = (1018.22 / 1018.22) / (1295.028 / 1295.028) = 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 - (8664.927 + 248.885) / 36355.763) / (1 - (19154.441 + 239.776) / 37783.733) = 0.754817 / 0.486705 = 1.5509

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 = 1295.028 / 1018.22 = 1.2719

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)) = (47.461 / (47.461 + 239.776)) / (51.444 / (51.444 + 248.885)) = 0.165234 / 0.171293 = 0.9646

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) = (551.744 / 1295.028) / (468.495 / 1018.22) = 0.426048 / 0.460111 = 0.926

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) = ((359.958 + 226.205) / 36355.763) / ((240.316 + 220.8) / 37783.733) = 0.016123 / 0.012204 = 1.3211

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 = (409.776 - 0 - 734.294) / 36355.763 = -0.008926

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.

UMB Financial has a M-score of -2.15 suggests that the company is unlikely to be a manipulator.

## UMB Financial Beneish M-Score Related Terms

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## UMB Financial (FRA:UMB) Business Description

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