Great Western Bancorp 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 Great Western Bancorp 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 * 0.6083 | + | 0.528 * 1 | + | 0.404 * 0.8461 | + | 0.892 * 1.1165 | + | 0.115 * -1.1598 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 0.9325 | + | 4.679 * -0.002184 | - | 0.327 * 0.8194 |
| = | -2.99 |
* 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 (Sep21) TTM: | Last Year (Sep20) TTM: |
Total Receivables was $37.1 Mil.
Revenue was 109.338 + 116.834 + 120.063 + 122.056 = $468.3 Mil.
Gross Profit was 109.338 + 116.834 + 120.063 + 122.056 = $468.3 Mil.
Total Current Assets was $3,932.6 Mil.
Total Assets was $12,911.5 Mil.
Property, Plant and Equipment(Net PPE) was $118.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $-15.9 Mil.
Selling, General, & Admin. Expense(SGA) was $184.6 Mil.
Total Current Liabilities was $79.3 Mil.
Long-Term Debt & Capital Lease Obligation was $229.0 Mil.
Net Income was 51.891 + 58.749 + 51.299 + 41.319 = $203.3 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 53.81 + 7.191 + 81.854 + 88.596 = $231.5 Mil.
|
Total Receivables was $54.7 Mil.
Revenue was 102.068 + 94.568 + 101.9 + 120.906 = $419.4 Mil.
Gross Profit was 102.068 + 94.568 + 101.9 + 120.906 = $419.4 Mil.
Total Current Assets was $2,262.2 Mil.
Total Assets was $12,604.4 Mil.
Property, Plant and Equipment(Net PPE) was $119.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $26.4 Mil.
Selling, General, & Admin. Expense(SGA) was $177.3 Mil.
Total Current Liabilities was $63.4 Mil.
Long-Term Debt & Capital Lease Obligation was $303.8 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) |
| = | (37.122 / 468.291) | / | (54.658 / 419.442) |
| = | 0.079271 | / | 0.130311 |
| | = | 0.6083 |
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) |
| = | (419.442 / 419.442) | / | (468.291 / 468.291) |
| = | 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 - (3932.584 + 117.978) / 12911.468) | / | (1 - (2262.171 + 119.054) / 12604.439) |
| = | 0.686282 | / | 0.81108 |
| | = | 0.8461 |
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 |
| = | 468.291 | / | 419.442 |
| | = | 1.1165 |
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)) |
| = | (26.354 / (26.354 + 119.054)) | / | (-15.945 / (-15.945 + 117.978)) |
| = | 0.181242 | / | -0.156273 |
| | = | -1.1598 |
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) |
| = | (184.57 / 468.291) | / | (177.292 / 419.442) |
| = | 0.394135 | / | 0.422685 |
| | = | 0.9325 |
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) |
| = | ((228.967 + 79.267) / 12911.468) | / | ((303.832 + 63.389) / 12604.439) |
| = | 0.023873 | / | 0.029134 |
| | = | 0.8194 |
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 |
| = | (203.258 - 0 | - | 231.451) | / | 12911.468 |
| | = | -0.002184 |
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.
Great Western Bancorp has a M-score of -2.99 suggests that the company is unlikely to be a manipulator.
Quick Browse
Personalize
Premium Gurus 
Create New Portfolio
Portfolio Contest
GWB has been successfully added to your