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GuruFocus has detected 1 Warning Sign with Goldman Sachs Group Inc $GS.
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Goldman Sachs Group Inc (NYSE:GS)
Beneish M-Score
-2.36 (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.

Goldman Sachs Group Inc has a M-score of -2.36 suggests that the company is not a manipulator.

GS' s Beneish M-Score Range Over the Past 10 Years
Min: -2.97   Max: 3.72
Current: -2.36

-2.97
3.72

During the past 13 years, the highest Beneish M-Score of Goldman Sachs Group Inc was 3.72. The lowest was -2.97. And the median was -2.24.


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 Goldman Sachs Group Inc 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 * 1.0084+0.528 * 1+0.404 * 0.9971+0.892 * 1.0933+0.115 * 1.2318
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.016+4.679 * 0.0042-0.327 * 1.0554
=-2.36

* 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 $54,460 Mil.
Revenue was 8026 + 8170 + 8168 + 7932 = $32,296 Mil.
Gross Profit was 8026 + 8170 + 8168 + 7932 = $32,296 Mil.
Total Current Assets was $0 Mil.
Total Assets was $894,069 Mil.
Property, Plant and Equipment(Net PPE) was $13,372 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,016 Mil.
Selling, General & Admin. Expense(SGA) was $13,580 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $221,746 Mil.
Net Income was 2255 + 2347 + 2094 + 1822 = $8,518 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was -3364 + 3797 + -3900 + 8215 = $4,748 Mil.
Accounts Receivable was $49,399 Mil.
Revenue was 6338 + 7273 + 6861 + 9069 = $29,541 Mil.
Gross Profit was 6338 + 7273 + 6861 + 9069 = $29,541 Mil.
Total Current Assets was $0 Mil.
Total Assets was $878,036 Mil.
Property, Plant and Equipment(Net PPE) was $10,612 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,011 Mil.
Selling, General & Admin. Expense(SGA) was $12,226 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $206,334 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)
=(54460 / 32296) / (49399 / 29541)
=1.68627694 / 1.67221827
=1.0084

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)
=(29541 / 29541) / (32296 / 32296)
=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 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 - (0 + 13372) / 894069) / (1 - (0 + 10612) / 878036)
=0.98504366 / 0.98791394
=0.9971

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
=32296 / 29541
=1.0933

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))
=(1011 / (1011 + 10612)) / (1016 / (1016 + 13372))
=0.08698271 / 0.0706144
=1.2318

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)
=(13580 / 32296) / (12226 / 29541)
=0.42048551 / 0.41386548
=1.016

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)
=((221746 + 0) / 894069) / ((206334 + 0) / 878036)
=0.24801889 / 0.23499492
=1.0554

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
=(8518 - 0 - 4748) / 894069
=0.0042

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.

Goldman Sachs Group Inc has a M-score of -2.36 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.

Goldman Sachs Group Inc Annual Data

Nov07Nov08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.41768.6210.41061.27731.19951.210.90540.62490.74291.1371
GMI 1111111111
AQI 0.9920.99580.99881.00121.00281.00070.99870.99920.99940.9975
SGI 1.22090.48322.03280.86690.73571.18581.00131.00940.97950.905
DEPI 8.69070.87930.89730.99650.82741.01321.3891.00411.38271.1854
SGAI 1.00472.36880.35641.17251.10280.87970.94980.98461.02251.0162
LVGI 1.00041.29721.14641.07090.97850.92960.95971.08991.04611.0536
TATA 0.07130.0005-0.04180.015-0.0196-0.00580.00380.0192-0.00210.0021
M-score -0.683.72-2.25-2.33-2.65-2.10-2.48-2.75-2.72-2.43

Goldman Sachs Group Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.62490.43940.41520.42130.74291.02231.15541.1931.13711.0084
GMI 1111111111
AQI 0.99920.9980.99680.99670.99940.99971.00151.00040.99750.9971
SGI 1.00941.0711.05310.96110.97950.82480.79430.86790.9051.0933
DEPI 1.00411.32751.56061.73091.38271.17941.05771.01141.18541.2318
SGAI 0.98460.98880.98641.01661.02251.02471.02611.0381.01621.016
LVGI 1.08991.04231.01051.03751.04611.08311.03311.06051.05361.0554
TATA 0.01920.00720.01590.003-0.00210.0066-0.0106-0.00420.00210.0042
M-score -2.75-2.87-2.83-2.97-2.72-2.60-2.58-2.46-2.43-2.36
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