RenaissanceRe Holdings 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 RenaissanceRe Holdings 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 * 0.8978 | + | 0.528 * 1 | + | 0.404 * 1.0707 | + | 0.892 * 1.4903 | + | 0.115 * 1 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 0 | + | 4.679 * 0.004012 | - | 0.327 * 0.9072 |
| = | -1.89 |
* 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 (Mar24) TTM: | Last Year (Mar23) TTM: |
Total Receivables was $14,593.32 Mil.
Revenue was 2585.298 + 3224.888 + 1825.145 + 1845.531 = $9,480.86 Mil.
Gross Profit was 2585.298 + 3224.888 + 1825.145 + 1845.531 = $9,480.86 Mil.
Total Current Assets was $20,839.22 Mil.
Total Assets was $50,944.33 Mil.
Property, Plant and Equipment(Net PPE) was $0.00 Mil.
Depreciation, Depletion and Amortization(DDA) was $-85.78 Mil.
Selling, General, & Admin. Expense(SGA) was $0.00 Mil.
Total Current Liabilities was $4,781.77 Mil.
Long-Term Debt & Capital Lease Obligation was $1,884.41 Mil.
Net Income was 373.642 + 1585.526 + 202.831 + 199.869 = $2,361.87 Mil.
Non Operating Income was -0.05 + 0.144 + -5.866 + 3.876 = $-1.90 Mil.
Cash Flow from Operations was 683.46 + 512.495 + 772.465 + 190.966 = $2,159.39 Mil.
|
Total Receivables was $10,907.53 Mil.
Revenue was 2195.57 + 2022.003 + 1284.765 + 859.589 = $6,361.93 Mil.
Gross Profit was 2195.57 + 2022.003 + 1284.765 + 859.589 = $6,361.93 Mil.
Total Current Assets was $17,148.34 Mil.
Total Assets was $38,270.33 Mil.
Property, Plant and Equipment(Net PPE) was $0.00 Mil.
Depreciation, Depletion and Amortization(DDA) was $-50.56 Mil.
Selling, General, & Admin. Expense(SGA) was $333.37 Mil.
Total Current Liabilities was $4,379.10 Mil.
Long-Term Debt & Capital Lease Obligation was $1,140.96 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) |
| = | (14593.32 / 9480.862) | / | (10907.533 / 6361.927) |
| = | 1.53924 | / | 1.714501 |
| | = | 0.8978 |
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) |
| = | (6361.927 / 6361.927) | / | (9480.862 / 9480.862) |
| = | 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 - (20839.224 + 0) / 50944.334) | / | (1 - (17148.335 + 0) / 38270.327) |
| = | 0.590941 | / | 0.551916 |
| | = | 1.0707 |
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 |
| = | 9480.862 | / | 6361.927 |
| | = | 1.4903 |
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)) |
| = | (-50.561 / (-50.561 + 0)) | / | (-85.777 / (-85.777 + 0)) |
| = | 1 | / | 1 |
| | = | 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) |
| = | (0 / 9480.862) | / | (333.374 / 6361.927) |
| = | 0 | / | 0.052401 |
| | = | 0 |
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) |
| = | ((1884.411 + 4781.766) / 50944.334) | / | ((1140.96 + 4379.1) / 38270.327) |
| = | 0.130852 | / | 0.144239 |
| | = | 0.9072 |
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 |
| = | (2361.868 - -1.896 | - | 2159.386) | / | 50944.334 |
| | = | 0.004012 |
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.
RenaissanceRe Holdings has a M-score of -1.89 suggests that the company is unlikely to be a manipulator.
Quick Browse
Personalize
Premium Gurus 
Create New Portfolio
Portfolio Contest
RNRPC.CL.PFD has been successfully added to your