First Metro 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 First Metro 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 (Sep12) TTM: | Last Year (Sep11) TTM: |
Total Receivables was ₱0.00 Mil.
Revenue was 650.599 + 610.125 + 1093.814 + 1071.951 = ₱3,426.49 Mil.
Gross Profit was 650.599 + 610.125 + 1093.814 + 1071.951 = ₱3,426.49 Mil.
Total Current Assets was ₱0.00 Mil.
Total Assets was ₱70,737.74 Mil.
Property, Plant and Equipment(Net PPE) was ₱88.19 Mil.
Depreciation, Depletion and Amortization(DDA) was ₱40.01 Mil.
Selling, General, & Admin. Expense(SGA) was ₱19.26 Mil.
Total Current Liabilities was ₱0.00 Mil.
Long-Term Debt & Capital Lease Obligation was ₱0.00 Mil.
Net Income was 632.819 + 970.683 + 978.698 + 437.664 = ₱3,019.86 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = ₱0.00 Mil.
Cash Flow from Operations was 2039.858 + 2438.082 + 1460.814 + -10300.283 = ₱-4,361.53 Mil.
|
Total Receivables was ₱0.00 Mil.
Revenue was 886.262 + 1051.024 + 698.487 + 741.81 = ₱3,377.58 Mil.
Gross Profit was 886.262 + 1051.024 + 698.487 + 741.81 = ₱3,377.58 Mil.
Total Current Assets was ₱0.00 Mil.
Total Assets was ₱79,455.07 Mil.
Property, Plant and Equipment(Net PPE) was ₱83.75 Mil.
Depreciation, Depletion and Amortization(DDA) was ₱34.90 Mil.
Selling, General, & Admin. Expense(SGA) was ₱19.59 Mil.
Total Current Liabilities was ₱0.00 Mil.
Long-Term Debt & Capital Lease Obligation was ₱0.00 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) |
| = | (0 / 3426.489) | / | (0 / 3377.583) |
| = | 0 | / | 0 |
| | = | |
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) |
| = | (3377.583 / 3377.583) | / | (3426.489 / 3426.489) |
| = | 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 + 88.193) / 70737.744) | / | (1 - (0 + 83.754) / 79455.074) |
| = | 0.998753 | / | 0.998946 |
| | = | |
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 |
| = | 3426.489 | / | 3377.583 |
| | = | |
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)) |
| = | (34.895 / (34.895 + 83.754)) | / | (40.009 / (40.009 + 88.193)) |
| = | 0.294103 | / | 0.312078 |
| | = | |
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) |
| = | (19.257 / 3426.489) | / | (19.585 / 3377.583) |
| = | 0.00562 | / | 0.005799 |
| | = | |
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) / 70737.744) | / | ((0 + 0) / 79455.074) |
| = | 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 |
| = | (3019.864 - 0 | - | -4361.529) | / | 70737.744 |
| | = | 0.104349 |
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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