AIICO Insurance 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 AIICO Insurance 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 * | + | 0.528 * | + | 0.404 * | + | 0.892 * | + | 0.115 * |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * | + | 4.679 * | - | 0.327 * |
| = | |
* 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 (Sep24) TTM: | Last Year (Sep23) TTM: |
Total Receivables was ₦5,340 Mil.
Revenue was 38568.812 + 43368.275 + 304.467 + 974.052 = ₦83,216 Mil.
Gross Profit was 38568.812 + 43368.275 + 304.467 + 974.052 = ₦83,216 Mil.
Total Current Assets was ₦0 Mil.
Total Assets was ₦399,572 Mil.
Property, Plant and Equipment(Net PPE) was ₦9,495 Mil.
Depreciation, Depletion and Amortization(DDA) was ₦871 Mil.
Selling, General, & Admin. Expense(SGA) was ₦1,586 Mil.
Total Current Liabilities was ₦0 Mil.
Long-Term Debt & Capital Lease Obligation was ₦47,562 Mil.
Net Income was -435.606 + 3937.146 + 8953.217 + 6151.76 = ₦18,607 Mil.
Non Operating Income was 1042.275 + 3114.948 + 7789.133 + 3818.06 = ₦15,764 Mil.
Cash Flow from Operations was 22932.021 + 14349.155 + 6913.725 + 2400.559 = ₦46,595 Mil.
|
Total Receivables was ₦0 Mil.
Revenue was 20296.726 + 30732.14 + -4051.616 + -38775.135 = ₦8,202 Mil.
Gross Profit was 20296.726 + 30732.14 + -4051.616 + -38775.135 = ₦8,202 Mil.
Total Current Assets was ₦0 Mil.
Total Assets was ₦0 Mil.
Property, Plant and Equipment(Net PPE) was ₦0 Mil.
Depreciation, Depletion and Amortization(DDA) was ₦573 Mil.
Selling, General, & Admin. Expense(SGA) was ₦-2,908 Mil.
Total Current Liabilities was ₦0 Mil.
Long-Term Debt & Capital Lease Obligation was ₦0 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) |
| = | (5339.997 / 83215.606) | / | (0 / 8202.115) |
| = | 0.064171 | / | 0 |
| | = | |
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) |
| = | (8202.115 / 8202.115) | / | (83215.606 / 83215.606) |
| = | 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 + 9495.203) / 399571.652) | / | (1 - (0 + 0) / 0) |
| = | 0.976237 | / | |
| | = | |
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 |
| = | 83215.606 | / | 8202.115 |
| | = | |
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)) |
| = | (573.441 / (573.441 + 0)) | / | (871.117 / (871.117 + 9495.203)) |
| = | 1 | / | 0.084033 |
| | = | |
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) |
| = | (1586.233 / 83215.606) | / | (-2908.293 / 8202.115) |
| = | 0.019062 | / | -0.354578 |
| | = | |
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) |
| = | ((47561.659 + 0) / 399571.652) | / | ((0 + 0) / 0) |
| = | 0.119032 | / | |
| | = | |
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 |
| = | (18606.517 - 15764.416 | - | 46595.46) | / | 399571.652 |
| | = | -0.109501 |
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.
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