Custodian Investment 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 Custodian Investment 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 ₦6,925 Mil.
Revenue was 63773.795 + 48544.709 + 26248.469 + 18425.691 = ₦156,993 Mil.
Gross Profit was 63773.795 + 48544.709 + 26248.469 + 18425.691 = ₦156,993 Mil.
Total Current Assets was ₦0 Mil.
Total Assets was ₦389,016 Mil.
Property, Plant and Equipment(Net PPE) was ₦14,501 Mil.
Depreciation, Depletion and Amortization(DDA) was ₦912 Mil.
Selling, General, & Admin. Expense(SGA) was ₦4,533 Mil.
Total Current Liabilities was ₦0 Mil.
Long-Term Debt & Capital Lease Obligation was ₦0 Mil.
Net Income was 21944.314 + 11618.846 + 10565.106 + 7485.859 = ₦51,614 Mil.
Non Operating Income was 16224.259 + 6970.637 + 6124.758 + 10597.08 = ₦39,917 Mil.
Cash Flow from Operations was -5475.178 + 13716.41 + 31445.939 + 5290.062 = ₦44,977 Mil.
|
Total Receivables was ₦4,990 Mil.
Revenue was 22414.48 + 32016.076 + 14183.782 + 7124.323 = ₦75,739 Mil.
Gross Profit was 22414.48 + 32016.076 + 14183.782 + 7124.323 = ₦75,739 Mil.
Total Current Assets was ₦0 Mil.
Total Assets was ₦254,692 Mil.
Property, Plant and Equipment(Net PPE) was ₦13,500 Mil.
Depreciation, Depletion and Amortization(DDA) was ₦825 Mil.
Selling, General, & Admin. Expense(SGA) was ₦4,611 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) |
| = | (6925.417 / 156992.664) | / | (4990.117 / 75738.661) |
| = | 0.044113 | / | 0.065886 |
| | = | |
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) |
| = | (75738.661 / 75738.661) | / | (156992.664 / 156992.664) |
| = | 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 + 14501.093) / 389015.956) | / | (1 - (0 + 13500.425) / 254691.731) |
| = | 0.962724 | / | 0.946993 |
| | = | |
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 |
| = | 156992.664 | / | 75738.661 |
| | = | |
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)) |
| = | (825.235 / (825.235 + 13500.425)) | / | (911.519 / (911.519 + 14501.093)) |
| = | 0.057605 | / | 0.059141 |
| | = | |
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) |
| = | (4533.141 / 156992.664) | / | (4611.291 / 75738.661) |
| = | 0.028875 | / | 0.060884 |
| | = | |
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) |
| = | ((0 + 0) / 389015.956) | / | ((0 + 0) / 254691.731) |
| = | 0 | / | 0 |
| | = | |
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 |
| = | (51614.125 - 39916.734 | - | 44977.233) | / | 389015.956 |
| | = | -0.085549 |
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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