EFU General Insurance 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 EFU General Insurance 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 * 0.8696 | + | 0.528 * 1 | + | 0.404 * 1.0053 | + | 0.892 * 1.2042 | + | 0.115 * 0.88 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 0.8361 | + | 4.679 * 0.050558 | - | 0.327 * 1.057 |
| = | -2.18 |
* 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 (Mar25) TTM: | Last Year (Mar24) TTM: |
Total Receivables was ₨9,142 Mil.
Revenue was 24513.378 + 40488.102 + 27403.979 + 27917.593 = ₨120,323 Mil.
Gross Profit was 24513.378 + 40488.102 + 27403.979 + 27917.593 = ₨120,323 Mil.
Total Current Assets was ₨0 Mil.
Total Assets was ₨337,777 Mil.
Property, Plant and Equipment(Net PPE) was ₨9,978 Mil.
Depreciation, Depletion and Amortization(DDA) was ₨1,868 Mil.
Selling, General, & Admin. Expense(SGA) was ₨2,465 Mil.
Total Current Liabilities was ₨0 Mil.
Long-Term Debt & Capital Lease Obligation was ₨959 Mil.
Net Income was 1219.765 + 507.985 + 739.977 + 1412.104 = ₨3,880 Mil.
Non Operating Income was 33.694 + 36.123 + 35.872 + 37.984 = ₨144 Mil.
Cash Flow from Operations was -3021.56 + -1022.286 + -4271.461 + -5025.975 = ₨-13,341 Mil.
|
Total Receivables was ₨8,731 Mil.
Revenue was 24687.103 + 30545.458 + 23592.557 + 21097.48 = ₨99,923 Mil.
Gross Profit was 24687.103 + 30545.458 + 23592.557 + 21097.48 = ₨99,923 Mil.
Total Current Assets was ₨0 Mil.
Total Assets was ₨281,775 Mil.
Property, Plant and Equipment(Net PPE) was ₨9,769 Mil.
Depreciation, Depletion and Amortization(DDA) was ₨1,574 Mil.
Selling, General, & Admin. Expense(SGA) was ₨2,449 Mil.
Total Current Liabilities was ₨0 Mil.
Long-Term Debt & Capital Lease Obligation was ₨757 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) |
| = | (9141.847 / 120323.052) | / | (8730.586 / 99922.598) |
| = | 0.075978 | / | 0.087373 |
| | = | 0.8696 |
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) |
| = | (99922.598 / 99922.598) | / | (120323.052 / 120323.052) |
| = | 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 - (0 + 9977.686) / 337776.555) | / | (1 - (0 + 9768.584) / 281774.911) |
| = | 0.970461 | / | 0.965332 |
| | = | 1.0053 |
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 |
| = | 120323.052 | / | 99922.598 |
| | = | 1.2042 |
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)) |
| = | (1573.968 / (1573.968 + 9768.584)) | / | (1868.01 / (1868.01 + 9977.686)) |
| = | 0.138767 | / | 0.157695 |
| | = | 0.88 |
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) |
| = | (2465.356 / 120323.052) | / | (2448.626 / 99922.598) |
| = | 0.020489 | / | 0.024505 |
| | = | 0.8361 |
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) |
| = | ((958.857 + 0) / 337776.555) | / | ((756.743 + 0) / 281774.911) |
| = | 0.002839 | / | 0.002686 |
| | = | 1.057 |
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 |
| = | (3879.831 - 143.673 | - | -13341.282) | / | 337776.555 |
| | = | 0.050558 |
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.
EFU General Insurance has a M-score of -2.18 suggests that the company is unlikely to be a manipulator.
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