Innergex Renewable Energy 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 Innergex Renewable Energy 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 * 0.9728 | + | 0.528 * 1.048 | + | 0.404 * 1.0152 | + | 0.892 * 1.0947 | + | 0.115 * 0.9659 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 1.0656 | + | 4.679 * -0.0358 | - | 0.327 * 0.9281 |
| = | -2.55 |
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
| This Year (Dec20) TTM: | Last Year (Dec19) TTM: |
Accounts Receivable was $49.8 Mil.
Revenue was 131.10078850808 + 122.9410430839 + 111.06331168831 + 94.638968481375 = $459.7 Mil.
Gross Profit was 102.59739245843 + 94.944066515495 + 88.671782762692 + 74.906160458453 = $361.1 Mil.
Total Current Assets was $353.2 Mil.
Total Assets was $5,585.3 Mil.
Property, Plant and Equipment(Net PPE) was $3,945.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $171.0 Mil.
Selling, General, & Admin. Expense(SGA) was $32.1 Mil.
Total Current Liabilities was $809.4 Mil.
Long-Term Debt & Capital Lease Obligation was $3,290.1 Mil.
Net Income was 9.3059567491607 + 8.8737717309146 + -1.8801652892562 + -38.495702005731 = $-22.2 Mil.
Non Operating Income was -0.43485049574518 + 13.177626606198 + 4.6613046044864 + -17.382521489971 = $0.0 Mil.
Cash Flow from Operations was 60.654227496292 + 49.064247921391 + 54.214138134593 + 13.633954154728 = $177.6 Mil.
|
Accounts Receivable was $46.7 Mil.
Revenue was 108.6764370871 + 107.85741258213 + 108.8817819249 + 94.547154289133 = $420.0 Mil.
Gross Profit was 88.699217860126 + 89.427535684616 + 88.048009632026 + 79.546032458305 = $345.7 Mil.
Total Current Assets was $232.1 Mil.
Total Assets was $4,838.7 Mil.
Property, Plant and Equipment(Net PPE) was $3,508.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $146.7 Mil.
Selling, General, & Admin. Expense(SGA) was $27.5 Mil.
Total Current Liabilities was $487.0 Mil.
Long-Term Debt & Capital Lease Obligation was $3,339.7 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) |
| = | (49.766570380201 / 459.74411176167) | / | (46.730199711444 / 419.96278588326) |
| = | 0.10824841 | / | 0.11127224 |
| | = | 0.9728 |
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) |
| = | (345.72079563507 / 419.96278588326) | / | (361.11940219507 / 459.74411176167) |
| = | 0.82321769 | / | 0.78547912 |
| | = | 1.048 |
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 - (353.22976032477 + 3944.9800921227) / 5585.3165742837) | / | (1 - (232.08444073202 + 3508.2580302225) / 4838.7151644012) |
| = | 0.23044472 | / | 0.22699677 |
| | = | 1.0152 |
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 |
| = | 459.74411176167 | / | 419.96278588326 |
| | = | 1.0947 |
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)) |
| = | (146.70210795117 / (146.70210795117 + 3508.2580302225)) | / | (171.04242398843 / (171.04242398843 + 3944.9800921227)) |
| = | 0.04013781 | / | 0.04155527 |
| | = | 0.9659 |
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) |
| = | (32.114190794207 / 459.74411176167) | / | (27.529631968099 / 419.96278588326) |
| = | 0.06985232 | / | 0.06555255 |
| | = | 1.0656 |
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) |
| = | ((3290.0827543134 + 809.37621984542) / 5585.3165742837) | / | ((3339.7486521376 + 487.01723745159) / 4838.7151644012) |
| = | 0.73397075 | / | 0.79086405 |
| | = | 0.9281 |
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 |
| = | (-22.196138814912 - 0.021559224967934 | - | 177.566567707) | / | 5585.3165742837 |
| | = | -0.0358 |
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.
Innergex Renewable Energy has a M-score of -2.55 suggests that the company is unlikely to be a manipulator.
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