Bank of Montreal 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 Montreal 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 * 23.0523 | + | 0.528 * 1 | + | 0.404 * 1.0004 | + | 0.892 * 1.1231 | + | 0.115 * 1.1006 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 0.9003 | + | 4.679 * -0.004894 | - | 0.327 * 1.0498 |
| = | 17.91 |
* 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 (Jan25) TTM: | Last Year (Jan24) TTM: |
Total Receivables was MXN575,788 Mil.
Revenue was 132140.867 + 121117.384 + 110576.065 + 98848.565 = MXN462,683 Mil.
Gross Profit was 132140.867 + 121117.384 + 110576.065 + 98848.565 = MXN462,683 Mil.
Total Current Assets was MXN0 Mil.
Total Assets was MXN21,047,530 Mil.
Property, Plant and Equipment(Net PPE) was MXN90,493 Mil.
Depreciation, Depletion and Amortization(DDA) was MXN29,170 Mil.
Selling, General, & Admin. Expense(SGA) was MXN166,018 Mil.
Total Current Liabilities was MXN0 Mil.
Long-Term Debt & Capital Lease Obligation was MXN2,329,404 Mil.
Net Income was 30594.403 + 33504.581 + 25291.19 + 23236.464 = MXN112,627 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = MXN0 Mil.
Cash Flow from Operations was 69848.14 + 68538.053 + 27474.504 + 49767.464 = MXN215,628 Mil.
|
Total Receivables was MXN22,240 Mil.
Revenue was 97864.544 + 109026.322 + 101959.99 + 103117.306 = MXN411,968 Mil.
Gross Profit was 97864.544 + 109026.322 + 101959.99 + 103117.306 = MXN411,968 Mil.
Total Current Assets was MXN0 Mil.
Total Assets was MXN16,951,782 Mil.
Property, Plant and Equipment(Net PPE) was MXN79,400 Mil.
Depreciation, Depletion and Amortization(DDA) was MXN29,112 Mil.
Selling, General, & Admin. Expense(SGA) was MXN164,190 Mil.
Total Current Liabilities was MXN0 Mil.
Long-Term Debt & Capital Lease Obligation was MXN1,787,039 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) |
| = | (575788.379 / 462682.881) | / | (22239.615 / 411968.162) |
| = | 1.244456 | / | 0.053984 |
| | = | 23.0523 |
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) |
| = | (411968.162 / 411968.162) | / | (462682.881 / 462682.881) |
| = | 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 + 90492.91) / 21047529.708) | / | (1 - (0 + 79399.777) / 16951782.064) |
| = | 0.995701 | / | 0.995316 |
| | = | 1.0004 |
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 |
| = | 462682.881 | / | 411968.162 |
| | = | 1.1231 |
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)) |
| = | (29111.885 / (29111.885 + 79399.777)) | / | (29169.836 / (29169.836 + 90492.91)) |
| = | 0.268283 | / | 0.243767 |
| | = | 1.1006 |
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) |
| = | (166018.216 / 462682.881) | / | (164189.741 / 411968.162) |
| = | 0.358816 | / | 0.39855 |
| | = | 0.9003 |
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) |
| = | ((2329403.913 + 0) / 21047529.708) | / | ((1787038.822 + 0) / 16951782.064) |
| = | 0.110674 | / | 0.105419 |
| | = | 1.0498 |
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 |
| = | (112626.638 - 0 | - | 215628.161) | / | 21047529.708 |
| | = | -0.004894 |
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 Montreal has a M-score of 17.91 signals that the company is likely to be a manipulator.
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