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# Great-West Lifeco (OTCPK:GWLIF) Beneish M-Score

: -2.70 (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 -2.7 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

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

GWLIF' s Beneish M-Score Range Over the Past 10 Years
Min: -2.74   Med: -2.41   Max: -1.01
Current: -2.7

During the past 13 years, the highest Beneish M-Score of Great-West Lifeco was -1.01. The lowest was -2.74. And the median was -2.41.

## Great-West Lifeco 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-West Lifeco 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 * 0.5727 + 0.528 * 1 + 0.404 * 1.0051 + 0.892 * 1.0885 + 0.115 * 0.9404 - 0.172 * SGAI + 4.679 * TATA - 0.327 * LVGI - 0.172 * 0.9326 + 4.679 * 0.000183 - 0.327 * 0.8874 = -2.75

* 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 (Jun23) TTM: Last Year (Jun22) TTM: Total Receivables was \$3,578 Mil. Revenue was 636.008 + 6149.236 + 10373.206 + 9283.305 = \$26,442 Mil. Gross Profit was 636.008 + 6149.236 + 10373.206 + 9283.305 = \$26,442 Mil. Total Current Assets was \$18,086 Mil. Total Assets was \$519,346 Mil. Property, Plant and Equipment(Net PPE) was \$797 Mil. Depreciation, Depletion and Amortization(DDA) was \$448 Mil. Selling, General, & Admin. Expense(SGA) was \$1,174 Mil. Total Current Liabilities was \$2,157 Mil. Long-Term Debt & Capital Lease Obligation was \$6,925 Mil. Net Income was 399.669 + 458.233 + 779.536 + 539.771 = \$2,177 Mil. Non Operating Income was 0 + 0 + 0 + 0 = \$0 Mil. Cash Flow from Operations was 471.925 + -755.682 + 1100.478 + 1265.462 = \$2,082 Mil. Total Receivables was \$5,740 Mil. Revenue was -4115.12 + 494.471 + 14159.375 + 13754.242 = \$24,293 Mil. Gross Profit was -4115.12 + 494.471 + 14159.375 + 13754.242 = \$24,293 Mil. Total Current Assets was \$20,732 Mil. Total Assets was \$523,512 Mil. Property, Plant and Equipment(Net PPE) was \$880 Mil. Depreciation, Depletion and Amortization(DDA) was \$450 Mil. Selling, General, & Admin. Expense(SGA) was \$1,157 Mil. Total Current Liabilities was \$2,690 Mil. Long-Term Debt & Capital Lease Obligation was \$7,627 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) = (3578.203 / 26441.755) / (5740.394 / 24292.968) = 0.135324 / 0.236299 = 0.5727

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) = (24292.968 / 24292.968) / (26441.755 / 26441.755) = 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 - (18085.956 + 797.08) / 519345.928) / (1 - (20731.803 + 880.194) / 523512.184) = 0.963641 / 0.958717 = 1.0051

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 = 26441.755 / 24292.968 = 1.0885

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)) = (449.801 / (449.801 + 880.194)) / (447.61 / (447.61 + 797.08)) = 0.338198 / 0.359616 = 0.9404

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) = (1174.168 / 26441.755) / (1156.67 / 24292.968) = 0.044406 / 0.047613 = 0.9326

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) = ((6925.335 + 2157.158) / 519345.928) / ((7627.304 + 2689.784) / 523512.184) = 0.017488 / 0.019707 = 0.8874

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 = (2177.209 - 0 - 2082.183) / 519345.928 = 0.000183

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-West Lifeco has a M-score of -2.75 suggests that the company is unlikely to be a manipulator.

## Great-West Lifeco Beneish M-Score Related Terms

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## Great-West Lifeco (OTCPK:GWLIF) Business Description

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