Arzan Financial Group for Financing and Investment KPSC (KUW:ARZAN) Beneish M-Score : -2.15 (As of Jun. 23, 2024)

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What is Arzan Financial Group for Financing and Investment KPSC Beneish M-Score?

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 -2.15 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

The historical rank and industry rank for Arzan Financial Group for Financing and Investment KPSC's Beneish M-Score or its related term are showing as below:

KUW:ARZAN' s Beneish M-Score Range Over the Past 10 Years
Min: -4.38 Med: -2.12 Max: 1.46
Current: -2.15

During the past 13 years, the highest Beneish M-Score of Arzan Financial Group for Financing and Investment KPSC was 1.46. The lowest was -4.38. And the median was -2.12.

Arzan Financial Group for Financing and Investment KPSC 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 Arzan Financial Group for Financing and Investment KPSC for today is based on a combination of the following eight different indices:

-4.84

0.92 * DSRI

0.528 * GMI

0.404 * AQI

0.892 * SGI

0.115 * DEPI

-4.84

0.92 * 1

0.528 * 1

0.404 * 1.0024

0.892 * 1.1301

0.115 * 1.0845

0.172 * SGAI

4.679 * TATA

0.327 * LVGI

0.172 * 0.8748

4.679 * 0.017822

0.327 * 0.6994

-2.15

* 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 (Mar24) TTM:

Last Year (Mar23) TTM:

Total Receivables was KWD0.00 Mil.
Revenue was 4.333 + 0.382 + 2.315 + 4.16 = KWD11.19 Mil.
Gross Profit was 4.333 + 0.382 + 2.315 + 4.16 = KWD11.19 Mil.
Total Current Assets was KWD0.00 Mil.
Total Assets was KWD238.36 Mil.
Property, Plant and Equipment(Net PPE) was KWD1.96 Mil.
Depreciation, Depletion and Amortization(DDA) was KWD0.21 Mil.
Selling, General, & Admin. Expense(SGA) was KWD1.56 Mil.
Total Current Liabilities was KWD0.00 Mil.
Long-Term Debt & Capital Lease Obligation was KWD25.78 Mil.
Net Income was 3.781 + 0.396 + 1.393 + 1.477 = KWD7.05 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = KWD0.00 Mil.
Cash Flow from Operations was -0.593 + 2.859 + -0.362 + 0.895 = KWD2.80 Mil.

Total Receivables was KWD0.00 Mil.
Revenue was 2.045 + -0.463 + 0.269 + 8.051 = KWD9.90 Mil.
Gross Profit was 2.045 + -0.463 + 0.269 + 8.051 = KWD9.90 Mil.
Total Current Assets was KWD0.00 Mil.
Total Assets was KWD185.54 Mil.
Property, Plant and Equipment(Net PPE) was KWD1.96 Mil.
Depreciation, Depletion and Amortization(DDA) was KWD0.23 Mil.
Selling, General, & Admin. Expense(SGA) was KWD1.58 Mil.
Total Current Liabilities was KWD0.00 Mil.
Long-Term Debt & Capital Lease Obligation was KWD28.69 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)
	=	(0 / 11.19)	/	(0 / 9.902)
	=	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)
	=	(9.902 / 9.902)	/	(11.19 / 11.19)
	=	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 + 1.963) / 238.359)	/	(1 - (0 + 1.961) / 185.538)
	=	0.991765	/	0.989431
	=	1.0024

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
	=	11.19	/	9.902
	=	1.1301

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))
	=	(0.234 / (0.234 + 1.961))	/	(0.214 / (0.214 + 1.963))
	=	0.106606	/	0.0983
	=	1.0845

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)
	=	(1.563 / 11.19)	/	(1.581 / 9.902)
	=	0.139678	/	0.159665
	=	0.8748

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)
	=	((25.78 + 0) / 238.359)	/	((28.69 + 0) / 185.538)
	=	0.108156	/	0.154631
	=	0.6994

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
	=	(7.047 - 0	-	2.799)	/	238.359
	=	0.017822

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.

Arzan Financial Group for Financing and Investment KPSC has a M-score of -2.15 suggests that the company is unlikely to be a manipulator.

Arzan Financial Group for Financing and Investment KPSC Beneish M-Score Related Terms

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Arzan Financial Group for Financing and Investment KPSC (KUW:ARZAN) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Asset Management » Arzan Financial Group for Financing and Investment KPSC (KUW:ARZAN) » Definitions » Beneish M-Score

Comparable Companies

Traded in Other Exchanges

N/A

Address

Ahmed Al Jaber Street, Arzan Tower, P.O.Box 26442, Sharq, Safat, Kuwait City, KWT, 13125

Website

https://www.arzan.com.kw

Arzan Financial Group for Financing and Investment KPSC is a company engaged in the provision of consumer instalment credit facilities and investments. The Group has four operating segments: instalment credit, investments, financial brokerage and real estate. It offers credit facilities to purchase consumer products, brokerage, investment platforms, third-party portfolio management services, and margin trading. It generates the majority of the revenue from the Investments segment. The Group's activities, assets and liabilities are carried out and located in Kuwait, GCC, Middle East, USA and Europe.