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GuruFocus has detected 6 Warning Signs with Gladstone Commercial Corp $GOOD.
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Gladstone Commercial Corp (NAS:GOOD)
Beneish M-Score
-2.67 (As of Today)

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

An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.

Gladstone Commercial Corp has a M-score of -2.67 suggests that the company is not a manipulator.

GOOD' s Beneish M-Score Range Over the Past 10 Years
Min: -420.29   Max: 6.68
Current: -2.67

-420.29
6.68

During the past 13 years, the highest Beneish M-Score of Gladstone Commercial Corp was 6.68. The lowest was -420.29. And the median was -2.55.


Definition

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (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 Gladstone Commercial Corp 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+0.528 * 0.995+0.404 * 0.9898+0.892 * 1.0209+0.115 * 0.9809
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9404+4.679 * -0.0493-0.327 * 0.9307
=-2.67

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $0.00 Mil.
Revenue was 22.314 + 22.009 + 21.589 + 21.247 = $87.16 Mil.
Gross Profit was 20.934 + 20.575 + 20.179 + 19.813 = $81.50 Mil.
Total Current Assets was $41.65 Mil.
Total Assets was $832.98 Mil.
Property, Plant and Equipment(Net PPE) was $683.85 Mil.
Depreciation, Depletion and Amortization(DDA) was $38.31 Mil.
Selling, General & Admin. Expense(SGA) was $10.11 Mil.
Total Current Liabilities was $5.90 Mil.
Long-Term Debt was $496.27 Mil.
Net Income was 4.356 + 2.293 + -0.073 + 0.883 = $7.46 Mil.
Non Operating Income was 5.908 + 0.272 + -0.152 + -0.352 = $5.68 Mil.
Cash Flow from Operations was 10.475 + 11.346 + 11.983 + 9.05 = $42.85 Mil.
Accounts Receivable was $0.00 Mil.
Revenue was 21.527 + 21.783 + 21.375 + 20.688 = $85.37 Mil.
Gross Profit was 19.917 + 20.239 + 19.763 + 19.51 = $79.43 Mil.
Total Current Assets was $45.85 Mil.
Total Assets was $811.46 Mil.
Property, Plant and Equipment(Net PPE) was $659.84 Mil.
Depreciation, Depletion and Amortization(DDA) was $36.21 Mil.
Selling, General & Admin. Expense(SGA) was $10.53 Mil.
Total Current Liabilities was $7.63 Mil.
Long-Term Debt was $518.01 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in 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)
=(0 / 87.159) / (0 / 85.373)
=0 / 0
=1

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)
=(79.429 / 85.373) / (81.501 / 87.159)
=0.93037611 / 0.93508416
=0.995

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 plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (41.653 + 683.851) / 832.977) / (1 - (45.847 + 659.839) / 811.461)
=0.12902277 / 0.1303513
=0.9898

4. SGI = Sales Growth Index

Ratio of sales 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
=87.159 / 85.373
=1.0209

5. DEPI = Depreciation Index

Measured as the ratio of the rate of depreciation 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))
=(36.214 / (36.214 + 659.839)) / (38.305 / (38.305 + 683.851))
=0.05202765 / 0.05304256
=0.9809

6. SGAI = Sales, General and Administrative expenses Index

The ratio of SGA expenses 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)
=(10.112 / 87.159) / (10.532 / 85.373)
=0.11601785 / 0.12336453
=0.9404

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$sgai= in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((496.268 + 5.896) / 832.977) / ((518.012 + 7.627) / 811.461)
=0.60285458 / 0.64776865
=0.9307

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
=(7.459 - 5.676 - 42.854) / 832.977
=-0.0493

An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.

Gladstone Commercial Corp has a M-score of -2.67 suggests that the company will not be a manipulator.


Related Terms

Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Gladstone Commercial Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0101111111
GMI 11.01581.0061.00170.99931.00881.0251.00990.99931.0053
AQI 0.40290.94061.06640.72921.23481.24891.10111.11620.97210.9942
SGI 1.2641.24511.04350.9841.04891.16591.19641.20231.13521.0316
DEPI 1.02480.9970.94240.99521.01911.01170.8880.89290.87270.9729
SGAI 10.35960.73090.93041.43830.82220.82250.98681.00810.90590.8264
LVGI 1.23031.12091.02841.01870.9591.01880.96240.97740.99450.942
TATA -0.0264-0.0297-0.0293-0.041-0.0309-0.0305-0.0228-0.045-0.0324-0.0422
M-score -5.21-2.41-3.47-2.88-2.44-2.34-2.36-2.46-2.52-2.60

Gladstone Commercial Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1011111111
GMI 1.00990.99530.98450.9860.99931.01381.02011.01351.00530.995
AQI 1.11621.03591.08351.14470.97210.8840.88690.85560.99420.9898
SGI 1.20231.18711.1491.13671.13521.1161.09051.06141.03161.0209
DEPI 0.89290.96310.90520.8840.87270.8650.90170.94290.97290.9809
SGAI 1.00811.00430.9780.86690.90590.78180.69990.77770.82640.9404
LVGI 0.97740.96590.97640.96630.99451.00181.00050.95170.9420.9307
TATA -0.045-0.0308-0.0323-0.032-0.0324-0.031-0.0328-0.0372-0.0422-0.0493
M-score -2.46-3.36-2.47-2.44-2.52-2.54-2.55-2.60-2.60-2.67
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