World Acceptance 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 World Acceptance 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 * 0.6696 | + | 0.528 * 1 | + | 0.404 * 1.0033 | + | 0.892 * 0.8925 | + | 0.115 * 0.9812 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 1.0443 | + | 4.679 * -0.181525 | - | 0.327 * 0.9034 |
| = | -3.71 |
* 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 (Dec23) TTM: | Last Year (Dec22) TTM: |
Total Receivables was €1.6 Mil.
Revenue was 115.596 + 116.499 + 117.297 + 138.84 = €488.2 Mil.
Gross Profit was 115.596 + 116.499 + 117.297 + 138.84 = €488.2 Mil.
Total Current Assets was €13.3 Mil.
Total Assets was €1,026.6 Mil.
Property, Plant and Equipment(Net PPE) was €94.7 Mil.
Depreciation, Depletion and Amortization(DDA) was €10.0 Mil.
Selling, General, & Admin. Expense(SGA) was €200.7 Mil.
Total Current Liabilities was €41.3 Mil.
Long-Term Debt & Capital Lease Obligation was €612.1 Mil.
Net Income was 15.282 + 15.069 + 8.804 + 23.005 = €62.2 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = €0.0 Mil.
Cash Flow from Operations was 53.997 + 59.368 + 55.127 + 80.025 = €248.5 Mil.
|
Total Receivables was €2.6 Mil.
Revenue was 125.044 + 139.608 + 138.82 + 143.541 = €547.0 Mil.
Gross Profit was 125.044 + 139.608 + 138.82 + 143.541 = €547.0 Mil.
Total Current Assets was €22.4 Mil.
Total Assets was €1,148.8 Mil.
Property, Plant and Equipment(Net PPE) was €101.8 Mil.
Depreciation, Depletion and Amortization(DDA) was €10.6 Mil.
Selling, General, & Admin. Expense(SGA) was €215.3 Mil.
Total Current Liabilities was €46.1 Mil.
Long-Term Debt & Capital Lease Obligation was €763.3 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) |
| = | (1.574 / 488.232) | / | (2.634 / 547.013) |
| = | 0.003224 | / | 0.004815 |
| | = | 0.6696 |
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) |
| = | (547.013 / 547.013) | / | (488.232 / 488.232) |
| = | 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 - (13.29 + 94.676) / 1026.617) | / | (1 - (22.422 + 101.777) / 1148.827) |
| = | 0.894833 | / | 0.891891 |
| | = | 1.0033 |
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 |
| = | 488.232 | / | 547.013 |
| | = | 0.8925 |
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)) |
| = | (10.571 / (10.571 + 101.777)) | / | (10.042 / (10.042 + 94.676)) |
| = | 0.094092 | / | 0.095896 |
| | = | 0.9812 |
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) |
| = | (200.652 / 488.232) | / | (215.28 / 547.013) |
| = | 0.410977 | / | 0.393556 |
| | = | 1.0443 |
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) |
| = | ((612.075 + 41.304) / 1026.617) | / | ((763.272 + 46.068) / 1148.827) |
| = | 0.636439 | / | 0.704492 |
| | = | 0.9034 |
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 |
| = | (62.16 - 0 | - | 248.517) | / | 1026.617 |
| | = | -0.181525 |
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.
World Acceptance has a M-score of -3.71 suggests that the company is unlikely to be a manipulator.
Quick Browse
Personalize
Premium Gurus 
Create New Portfolio
Portfolio Contest
FRA:WOA has been successfully added to your