Bank Of China 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 Bank Of China 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 | + | 0.528 * 1 | + | 0.404 * 1.0007 | + | 0.892 * 1.082 | + | 0.115 * 1 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * -9.2409 | + | 4.679 * -0.009527 | - | 0.327 * 1.0558 |
| = | -0.71 |
* 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 (Dec24) TTM: | Last Year (Dec23) TTM: |
Total Receivables was MXN0 Mil.
Revenue was 434928.441 + 447036.038 + 394442.699 + 370422.696 = MXN1,646,830 Mil.
Gross Profit was 434928.441 + 447036.038 + 394442.699 + 370422.696 = MXN1,646,830 Mil.
Total Current Assets was MXN0 Mil.
Total Assets was MXN100,433,740 Mil.
Property, Plant and Equipment(Net PPE) was MXN756,525 Mil.
Depreciation, Depletion and Amortization(DDA) was MXN0 Mil.
Selling, General, & Admin. Expense(SGA) was MXN322,656 Mil.
Total Current Liabilities was MXN0 Mil.
Long-Term Debt & Capital Lease Obligation was MXN7,224,210 Mil.
Net Income was 177823.581 + 159064.009 + 158112.436 + 129029.747 = MXN624,030 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = MXN0 Mil.
Cash Flow from Operations was 1096615.032 + 652776.855 + -175976.222 + 7466.759 = MXN1,580,882 Mil.
|
Total Receivables was MXN0 Mil.
Revenue was 361122.954 + 360183.235 + 366443.86 + 434327.454 = MXN1,522,078 Mil.
Gross Profit was 361122.954 + 360183.235 + 366443.86 + 434327.454 = MXN1,522,078 Mil.
Total Current Assets was MXN0 Mil.
Total Assets was MXN77,100,309 Mil.
Property, Plant and Equipment(Net PPE) was MXN633,400 Mil.
Depreciation, Depletion and Amortization(DDA) was MXN0 Mil.
Selling, General, & Admin. Expense(SGA) was MXN-32,271 Mil.
Total Current Liabilities was MXN0 Mil.
Long-Term Debt & Capital Lease Obligation was MXN5,252,662 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 / 1646829.874) | / | (0 / 1522077.503) |
| = | 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) |
| = | (1522077.503 / 1522077.503) | / | (1646829.874 / 1646829.874) |
| = | 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 + 756525.071) / 100433740.376) | / | (1 - (0 + 633399.858) / 77100309.356) |
| = | 0.992467 | / | 0.991785 |
| | = | 1.0007 |
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 |
| = | 1646829.874 | / | 1522077.503 |
| | = | 1.082 |
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 / (0 + 633399.858)) | / | (0 / (0 + 756525.071)) |
| = | 0 | / | 0 |
| | = | 1 |
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) |
| = | (322656.256 / 1646829.874) | / | (-32271.278 / 1522077.503) |
| = | 0.195926 | / | -0.021202 |
| | = | -9.2409 |
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) |
| = | ((7224209.724 + 0) / 100433740.376) | / | ((5252662.287 + 0) / 77100309.356) |
| = | 0.07193 | / | 0.068128 |
| | = | 1.0558 |
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 |
| = | (624029.773 - 0 | - | 1580882.424) | / | 100433740.376 |
| | = | -0.009527 |
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.
Bank Of China has a M-score of -0.71 signals that the company is likely to be a manipulator.
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