Delek Group 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 Delek Group 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 * 0.3114 | + | 0.528 * 0.7482 | + | 0.404 * 1.043 | + | 0.892 * 1.3904 | + | 0.115 * 0.3565 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 0.8821 | + | 4.679 * -0.1467 | - | 0.327 * 0.953 |
| = | -3.61 |
* All numbers are in millions except for per share data and ratio. All numbers are indicated in the company's associated stock exchange currency.
| This Year (Dec20) TTM: | Last Year (Dec19) TTM: |
Accounts Receivable was $251 Mil.
Revenue was 500.89664791625 + 522.66143494321 + 593.16708305872 + 905.23121254387 = $2,522 Mil.
Gross Profit was 253.51378691967 + 251.9810554389 + 247.99595358889 + 287.84697208896 = $1,041 Mil.
Total Current Assets was $1,943 Mil.
Total Assets was $10,507 Mil.
Property, Plant and Equipment(Net PPE) was $6,055 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,534 Mil.
Selling, General, & Admin. Expense(SGA) was $128 Mil.
Total Current Liabilities was $3,317 Mil.
Long-Term Debt & Capital Lease Obligation was $3,525 Mil.
Net Income was 327.69799058903 + 45.675398127002 + -99.934092546327 + -847.90705516301 = $-574 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 185.76705546955 + 177.49030547338 + 345.47767576598 + 258.11198136199 = $967 Mil.
|
Accounts Receivable was $581 Mil.
Revenue was 432.23027757767 + 173.50520362338 + 599.60455527796 + 608.49439786644 = $1,814 Mil.
Gross Profit was 173.19865732722 + 81.541314777064 + 124.45779623868 + 181.16886102724 = $560 Mil.
Total Current Assets was $1,681 Mil.
Total Assets was $14,396 Mil.
Property, Plant and Equipment(Net PPE) was $9,419 Mil.
Depreciation, Depletion and Amortization(DDA) was $731 Mil.
Selling, General, & Admin. Expense(SGA) was $104 Mil.
Total Current Liabilities was $2,617 Mil.
Long-Term Debt & Capital Lease Obligation was $7,219 Mil.
|
1. DSRI = Days Sales in Receivables Index
Measured as the ratio of Revenue in Accounts Receivable 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) |
| = | (251.36796284659 / 2521.9563784621) | / | (580.59868491639 / 1813.8344343454) |
| = | 0.09967181 | / | 0.32009464 |
| | = | 0.3114 |
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) |
| = | (560.3666293702 / 1813.8344343454) | / | (1041.3377680364 / 2521.9563784621) |
| = | 0.30894034 | / | 0.41290872 |
| | = | 0.7482 |
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 - (1942.8904250264 + 6055.2089879374) / 10507.487393284) | / | (1 - (1681.0998881106 + 9418.9414956394) / 14396.333706298) |
| = | 0.23881903 | / | 0.22896749 |
| | = | 1.043 |
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 |
| = | 2521.9563784621 | / | 1813.8344343454 |
| | = | 1.3904 |
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)) |
| = | (731.41946262434 / (731.41946262434 + 9418.9414956394)) | / | (1533.9576659565 / (1533.9576659565 + 6055.2089879374)) |
| = | 0.07205847 | / | 0.20212465 |
| | = | 0.3565 |
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) |
| = | (127.82980549638 / 2521.9563784621) | / | (104.22574069249 / 1813.8344343454) |
| = | 0.05068676 | / | 0.05746155 |
| | = | 0.8821 |
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) |
| = | ((3524.669313183 + 3316.5243780942) / 10507.487393284) | / | ((7218.5521818433 + 2616.9857302699) / 14396.333706298) |
| = | 0.65107798 | / | 0.68319741 |
| | = | 0.953 |
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 |
| = | (-574.4677589933 - 0 | - | 966.8470180709) | / | 10507.487393284 |
| | = | -0.1467 |
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.
Delek Group has a M-score of -3.61 suggests that the company is unlikely to be a manipulator.
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