F N B 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 F N B 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 * 1.0499 | + | 0.528 * 1 | + | 0.404 * 1.0086 | + | 0.892 * 1.0887 | + | 0.115 * 0.9989 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 1.0736 | + | 4.679 * 0.001343 | - | 0.327 * 1.757 |
| = | -2.61 |
* 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 (Dec23) TTM: | Last Year (Dec22) TTM: |
Total Receivables was $578 Mil.
Revenue was 338 + 407 + 410 + 416 = $1,571 Mil.
Gross Profit was 338 + 407 + 410 + 416 = $1,571 Mil.
Total Current Assets was $5,408 Mil.
Total Assets was $46,158 Mil.
Property, Plant and Equipment(Net PPE) was $461 Mil.
Depreciation, Depletion and Amortization(DDA) was $78 Mil.
Selling, General, & Admin. Expense(SGA) was $540 Mil.
Total Current Liabilities was $1,900 Mil.
Long-Term Debt & Capital Lease Obligation was $2,084 Mil.
Net Income was 51 + 145 + 142 + 147 = $485 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was -20 + 294 + 130 + 19 = $423 Mil.
|
Total Receivables was $506 Mil.
Revenue was 415 + 380 + 336 + 312 = $1,443 Mil.
Gross Profit was 415 + 380 + 336 + 312 = $1,443 Mil.
Total Current Assets was $5,455 Mil.
Total Assets was $43,725 Mil.
Property, Plant and Equipment(Net PPE) was $432 Mil.
Depreciation, Depletion and Amortization(DDA) was $73 Mil.
Selling, General, & Admin. Expense(SGA) was $462 Mil.
Total Current Liabilities was $930 Mil.
Long-Term Debt & Capital Lease Obligation was $1,218 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) |
| = | (577.8 / 1571) | / | (505.5 / 1443) |
| = | 0.367791 | / | 0.350312 |
| | = | 1.0499 |
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) |
| = | (1443 / 1443) | / | (1571 / 1571) |
| = | 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 - (5407.8 + 461) / 46158) | / | (1 - (5454.5 + 432) / 43725) |
| = | 0.872854 | / | 0.865374 |
| | = | 1.0086 |
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 |
| = | 1571 | / | 1443 |
| | = | 1.0887 |
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)) |
| = | (73 / (73 + 432)) | / | (78 / (78 + 461)) |
| = | 0.144554 | / | 0.144712 |
| | = | 0.9989 |
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) |
| = | (540 / 1571) | / | (462 / 1443) |
| = | 0.34373 | / | 0.320166 |
| | = | 1.0736 |
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) |
| = | ((2084 + 1900) / 46158) | / | ((1218 + 930) / 43725) |
| = | 0.086312 | / | 0.049125 |
| | = | 1.757 |
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 |
| = | (485 - 0 | - | 423) | / | 46158 |
| | = | 0.001343 |
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.
F N B has a M-score of -2.61 suggests that the company is unlikely to be a manipulator.
Quick Browse
Personalize
Premium Gurus 
Create New Portfolio
Portfolio Contest
FNB has been successfully added to your