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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 -2.4 no higher than -1.78, which implies that the company is unlikely to be a manipulator.
The historical rank and industry rank for SLM's Beneish M-Score or its related term are showing as below:
During the past 13 years, the highest Beneish M-Score of SLM was -1.95. The lowest was -3.11. And the median was -2.33.
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 SLM 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 * 0.9496 | + | 0.528 * 1 | + | 0.404 * 1.0002 | + | 0.892 * 1.0488 | + | 0.115 * 0.414 | |
- | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI | |||||||
- | 0.172 * 1.1672 | + | 4.679 * 0.034764 | - | 0.327 * 0.9402 | |||||||
= | -2.40 |
* 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 $1,664 Mil. Revenue was 561.174 + 442.999 + 408.866 + 530.685 = $1,944 Mil. Gross Profit was 561.174 + 442.999 + 408.866 + 530.685 = $1,944 Mil. Total Current Assets was $0 Mil. Total Assets was $28,277 Mil. Property, Plant and Equipment(Net PPE) was $127 Mil. Depreciation, Depletion and Amortization(DDA) was $83 Mil. Selling, General, & Admin. Expense(SGA) was $383 Mil. Total Current Liabilities was $0 Mil. Long-Term Debt & Capital Lease Obligation was $4,977 Mil. Net Income was 289.931 + 168.443 + 29.365 + 265.065 = $753 Mil. Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil. Cash Flow from Operations was -76.711 + -27.141 + -59.35 + -67.034 = $-230 Mil. |
Total Receivables was $1,671 Mil. Revenue was 426.779 + 340.788 + 464.613 + 621.061 = $1,853 Mil. Gross Profit was 426.779 + 340.788 + 464.613 + 621.061 = $1,853 Mil. Total Current Assets was $0 Mil. Total Assets was $29,454 Mil. Property, Plant and Equipment(Net PPE) was $138 Mil. Depreciation, Depletion and Amortization(DDA) was $27 Mil. Selling, General, & Admin. Expense(SGA) was $313 Mil. Total Current Liabilities was $0 Mil. Long-Term Debt & Capital Lease Obligation was $5,514 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) |
= | (1664.22 / 1943.724) | / | (1671.052 / 1853.241) | |
= | 0.856202 | / | 0.901692 | |
= | 0.9496 |
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) | |
= | (1853.241 / 1853.241) | / | (1943.724 / 1943.724) | |
= | 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 + 127.414) / 28277.282) | / | (1 - (0 + 137.89) / 29453.901) | |
= | 0.995494 | / | 0.995318 | |
= | 1.0002 |
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 | |
= | 1943.724 | / | 1853.241 | |
= | 1.0488 |
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)) |
= | (26.984 / (26.984 + 137.89)) | / | (83.299 / (83.299 + 127.414)) | |
= | 0.163664 | / | 0.39532 | |
= | 0.414 |
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) |
= | (382.93 / 1943.724) | / | (312.806 / 1853.241) | |
= | 0.197008 | / | 0.168789 | |
= | 1.1672 |
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) |
= | ((4976.882 + 0) / 28277.282) | / | ((5513.976 + 0) / 29453.901) | |
= | 0.176003 | / | 0.187207 | |
= | 0.9402 |
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 | |
= | (752.804 - 0 | - | -230.236) | / | 28277.282 | |
= | 0.034764 |
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.
SLM has a M-score of -2.40 suggests that the company is unlikely to be a manipulator.
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Peter M Graham | officer: EVP | 150 CORPORATE BLVD, NORFOLK VA 23502 |
Nicolas Jafarieh | officer: SVP, General Counsel | SLM CORPORATION, 300 CONTINENTAL DRIVE, NEWARK DE 19713 |
Munish Pahwa | officer: Chief Risk Officer | 300 CONTINENTAL DRIVE, NEWARK DE 19713 |
Jonathan Boyles | officer: SVP & Controller | 300 CONTINENTAL DRIVE., NEWARK DE 19713 |
Steven Mcgarry | officer: Chief Financial Officer | 300 CONTINENTAL DRIVE, NEWARK DE 19713 |
Richard Scott Blackley | director | 1680 CAPITAL ONE DRIVE, MCLEAN VA 22102 |
Samuel Theron Ramsey | director | 6612 SAIN MILLING ROAD, VALE NC 28168 |
Robert S. Strong | director | 300 CONTINENTAL DR., NEWARK DE 19713 |
Ted Manvitz | director | 300 CONTINENTAL DRIVE, NEWARK DE 19713 |
Franke Mary Carter Warren | director | 300 CONTINENTAL DRIVE, NEWARK DE 19713 |
Kerri A. Palmer | officer: EVP & Chief Risk and Comp Off | 300 CONTINENTAL DRIVE, NEWARK DE 19713 |
Paul F Thome | officer: EVP & Chief Admin Officer | 300 CONTINENTAL DRIVE, NEWARK DE 19713 |
Daniel P Kennedy | officer: SVP, Chief Operational Officer | 300 CONTINENTAL DRIVE, NEWARK DE 19713 |
Jonathan W. Witter | director, officer: CEO | 1680 CAPITAL ONE DRIVE, MCLEAN VA 22102 |
Earl A Goode | director | 300 CONTINENTAL DRIVE, NEWARKD DE 19713 |
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