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# NewtekOne (NAS:NEWT) Beneish M-Score

: -1.11 (As of Today)
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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.

Warning Sign:

Beneish M-Score -1.11 higher than -1.78, which implies that the company might have manipulated its financial results.

The historical rank and industry rank for NewtekOne's Beneish M-Score or its related term are showing as below:

NEWT' s Beneish M-Score Range Over the Past 10 Years
Min: -3.33   Med: -1.8   Max: 18.63
Current: -1.11

During the past 13 years, the highest Beneish M-Score of NewtekOne was 18.63. The lowest was -3.33. And the median was -1.80.

## NewtekOne 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 NewtekOne 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 * 2.0048 + 0.528 * 1 + 0.404 * 0.8907 + 0.892 * 0.9597 + 0.115 * 0.3151 - 0.172 * SGAI + 4.679 * TATA - 0.327 * LVGI - 0.172 * 2.1629 + 4.679 * 0.175742 - 0.327 * 1.0549 = -1.11

* 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 (Mar23) TTM: Last Year (Mar22) TTM: Total Receivables was \$41.4 Mil. Revenue was 42.866 + 23.643 + 27.938 + 28.285 = \$122.7 Mil. Gross Profit was 42.866 + 23.643 + 27.938 + 28.285 = \$122.7 Mil. Total Current Assets was \$166.0 Mil. Total Assets was \$1,249.7 Mil. Property, Plant and Equipment(Net PPE) was \$7.5 Mil. Depreciation, Depletion and Amortization(DDA) was \$1.0 Mil. Selling, General, & Admin. Expense(SGA) was \$35.5 Mil. Total Current Liabilities was \$240.9 Mil. Long-Term Debt & Capital Lease Obligation was \$539.0 Mil. Net Income was 11.718 + -2.222 + 11.362 + 13.519 = \$34.4 Mil. Non Operating Income was 0 + 0 + 0 + 0 = \$0.0 Mil. Cash Flow from Operations was -116.359 + 65.175 + -62.412 + -71.659 = \$-185.3 Mil. Total Receivables was \$21.5 Mil. Revenue was 25.304 + 37.098 + 33.383 + 32.096 = \$127.9 Mil. Gross Profit was 25.304 + 37.098 + 33.383 + 32.096 = \$127.9 Mil. Total Current Assets was \$26.4 Mil. Total Assets was \$1,009.3 Mil. Property, Plant and Equipment(Net PPE) was \$7.0 Mil. Depreciation, Depletion and Amortization(DDA) was \$0.3 Mil. Selling, General, & Admin. Expense(SGA) was \$17.1 Mil. Total Current Liabilities was \$129.9 Mil. Long-Term Debt & Capital Lease Obligation was \$467.2 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) = (41.438 / 122.732) / (21.537 / 127.881) = 0.33763 / 0.168414 = 2.0048

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) = (127.881 / 127.881) / (122.732 / 122.732) = 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 - (165.983 + 7.492) / 1249.739) / (1 - (26.448 + 7.005) / 1009.312) = 0.861191 / 0.966856 = 0.8907

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 = 122.732 / 127.881 = 0.9597

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)) = (0.282 / (0.282 + 7.005)) / (1.049 / (1.049 + 7.492)) = 0.038699 / 0.122819 = 0.3151

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) = (35.503 / 122.732) / (17.103 / 127.881) = 0.289273 / 0.133742 = 2.1629

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) = ((539.035 + 240.949) / 1249.739) / ((467.215 + 129.941) / 1009.312) = 0.624118 / 0.591647 = 1.0549

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 = (34.377 - 0 - -185.255) / 1249.739 = 0.175742

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.

NewtekOne has a M-score of -1.11 signals that the company is likely to be a manipulator.

## NewtekOne Beneish M-Score Related Terms

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