Hope Bancorp 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 Hope Bancorp 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 * 1.9207 | + | 0.528 * 1 | + | 0.404 * 1.0002 | + | 0.892 * 1.0055 | + | 0.115 * 1 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 0.9898 | + | 4.679 * -0.0032 | - | 0.327 * 0.5606 |
| = | -1.50 |
* All numbers are in millions except for per share data and ratio. All numbers are indicated in the company's associated stock exchange currency.
| This Year (Dec20) TTM: | Last Year (Dec19) TTM: |
Accounts Receivable was $59.4 Mil.
Revenue was 130.17 + 133.357 + 119.693 + 130.893 = $514.1 Mil.
Gross Profit was 130.17 + 133.357 + 119.693 + 130.893 = $514.1 Mil.
Total Current Assets was $2,724.3 Mil.
Total Assets was $17,106.7 Mil.
Property, Plant and Equipment(Net PPE) was $96.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.0 Mil.
Selling, General, & Admin. Expense(SGA) was $184.1 Mil.
Total Current Liabilities was $14.7 Mil.
Long-Term Debt & Capital Lease Obligation was $610.8 Mil.
Net Income was 28.319 + 30.49 + 26.753 + 25.953 = $111.5 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 43.642 + 22.518 + 27.889 + 71.867 = $165.9 Mil.
|
Accounts Receivable was $30.8 Mil.
Revenue was 124.77 + 128.222 + 127.959 + 130.352 = $511.3 Mil.
Gross Profit was 124.77 + 128.222 + 127.959 + 130.352 = $511.3 Mil.
Total Current Assets was $2,474.5 Mil.
Total Assets was $15,667.4 Mil.
Property, Plant and Equipment(Net PPE) was $110.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.0 Mil.
Selling, General, & Admin. Expense(SGA) was $185.0 Mil.
Total Current Liabilities was $33.8 Mil.
Long-Term Debt & Capital Lease Obligation was $988.0 Mil.
|
1. DSRI = Days Sales in Receivables Index
Measured as the ratio of Revenue in Accounts Receivable 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) |
| = | (59.43 / 514.113) | / | (30.772 / 511.303) |
| = | 0.11559715 | / | 0.06018349 |
| | = | 1.9207 |
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) |
| = | (511.303 / 511.303) | / | (514.113 / 514.113) |
| = | 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 - (2724.262 + 96.062) / 17106.664) | / | (1 - (2474.488 + 110.605) / 15667.44) |
| = | 0.83513302 | / | 0.83500221 |
| | = | 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 |
| = | 514.113 | / | 511.303 |
| | = | 1.0055 |
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 + 110.605)) | / | (0 / (0 + 96.062)) |
| = | 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) |
| = | (184.094 / 514.113) | / | (184.982 / 511.303) |
| = | 0.35808081 | / | 0.36178548 |
| | = | 0.9898 |
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) |
| = | ((610.773 + 14.706) / 17106.664) | / | ((987.999 + 33.81) / 15667.44) |
| = | 0.03656347 | / | 0.06521863 |
| | = | 0.5606 |
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 |
| = | (111.515 - 0 | - | 165.916) | / | 17106.664 |
| | = | -0.0032 |
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.
Hope Bancorp has a M-score of -1.50 signals that the company is likely to be a manipulator.
Excel Add-In GURUF
API
My Portfolios
Create New Portfolio
Portfolio Contest
My Gurus
Personalize
My Gurus
0.6(3.9%) Volume: 1,062,217 9:08PM EDT
Email Alerts
Stock PDF
RSS
Website
Filings
Manual of Stocks™ Web APP
NAS:HOPE has been successfully added to your 
