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Note: Financial institutions were excluded from the sample in Beneish paper when calculating Beneish M-Score. Thus, the prediction might not fit banks and insurance companies.
The zones of discrimination for M-Score is as such:
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.
Warning Sign:
Beneish M-Score -1.73 higher than -1.78, which implies that the company might have manipulated its financial results.
The historical rank and industry rank for Rand Capital's Beneish M-Score or its related term are showing as below:
During the past 13 years, the highest Beneish M-Score of Rand Capital was 27.99. The lowest was -2.77. And the median was -0.63.
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 Rand Capital 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 * 0.6499 | + | 0.528 * 1 | + | 0.404 * 1 | + | 0.892 * 1.8982 | + | 0.115 * 1 | |
- | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI | |||||||
- | 0.172 * 0.5795 | + | 4.679 * -0.007882 | - | 0.327 * 0.2809 | |||||||
= | -1.73 |
* 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 (Sep24) TTM: | Last Year (Sep23) TTM: |
Total Receivables was $0.74 Mil. Revenue was 2.738 + 8.034 + 1.822 + 1.54 = $14.13 Mil. Gross Profit was 2.738 + 8.034 + 1.822 + 1.54 = $14.13 Mil. Total Current Assets was $0.00 Mil. Total Assets was $79.80 Mil. Property, Plant and Equipment(Net PPE) was $0.00 Mil. Depreciation, Depletion and Amortization(DDA) was $0.02 Mil. Selling, General, & Admin. Expense(SGA) was $1.33 Mil. Total Current Liabilities was $0.00 Mil. Long-Term Debt & Capital Lease Obligation was $3.90 Mil. Net Income was 2.637 + 7.738 + 1.399 + 1.089 = $12.86 Mil. Non Operating Income was 0 + 0 + 0 + 0 = $0.00 Mil. Cash Flow from Operations was 15.108 + 4.283 + -4.841 + -1.058 = $13.49 Mil. |
Total Receivables was $0.60 Mil. Revenue was 1.02 + 2.989 + 2.612 + 0.825 = $7.45 Mil. Gross Profit was 1.02 + 2.989 + 2.612 + 0.825 = $7.45 Mil. Total Current Assets was $0.00 Mil. Total Assets was $79.04 Mil. Property, Plant and Equipment(Net PPE) was $0.00 Mil. Depreciation, Depletion and Amortization(DDA) was $0.02 Mil. Selling, General, & Admin. Expense(SGA) was $1.21 Mil. Total Current Liabilities was $0.00 Mil. Long-Term Debt & Capital Lease Obligation was $13.75 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) |
= | (0.739 / 14.134) | / | (0.599 / 7.446) | |
= | 0.052285 | / | 0.080446 | |
= | 0.6499 |
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) | |
= | (7.446 / 7.446) | / | (14.134 / 14.134) | |
= | 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 - (0 + 0) / 79.798) | / | (1 - (0 + 0) / 79.04) | |
= | 1 | / | 1 | |
= | 1 |
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 | |
= | 14.134 | / | 7.446 | |
= | 1.8982 |
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)) |
= | (0.018 / (0.018 + 0)) | / | (0.024 / (0.024 + 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) |
= | (1.332 / 14.134) | / | (1.211 / 7.446) | |
= | 0.094241 | / | 0.162638 | |
= | 0.5795 |
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) |
= | ((3.9 + 0) / 79.798) | / | ((13.75 + 0) / 79.04) | |
= | 0.048873 | / | 0.173963 | |
= | 0.2809 |
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 | |
= | (12.863 - 0 | - | 13.492) | / | 79.798 | |
= | -0.007882 |
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.
Rand Capital has a M-score of -1.73 signals that the company is likely to be a manipulator.
Thank you for viewing the detailed overview of Rand Capital's Beneish M-Score provided by GuruFocus.com. Please click on the following links to see related term pages.
Adam Samuel Gusky | director | RAND CAPITAL CORPORATION, 14 LAFAYETTE SQUARE, SUITE 2200, BUFFALO NY 14203 |
Benjamin E Godley | director | RAND CAPITAL CORPORATION, 14 LAFAYETTE SQUARE, SUITE 2200, BUFFALO NY 14203 |
Cari L Jaroslawsky | director | C/O HARTER SECREST & EMERY LLP, 1600 BAUSCH & LOMB PLACE, ROCHESTER NY 14604 |
Daniel P Penberthy | officer: EVP and CFO | C/O RAND CAPITAL CORP, 2200 RAND BLDG, BUFFALO NY 14203 |
Robert M Zak | director | 250 MAIN STREET, BUFFALO NY 14202 |
Erland E Kailbourne | director | C/O RAND CAPITAL CORP, 2200 RAND BUILDING, BUFFFALO NY 14203 |
Heather Eastgate | officer: Chief Compliance Officer | C/O RAND CAPITAL CORPORATION, 14 LAFAYETTE SQUARE, SUITE 1405, BUFFALO NY 14203 |
East Asset Management, Llc | 10 percent owner | 777 NW BEACON SQUARE BLVD., BOCA RATON FL 33487 |
Nancy Marie Stone | officer: Chief Compliance Officer | C/O RAND CAPITAL CORPORATION, 14 LAFAYETTE SQUARE, SUITE 1405, BUFFALO NY 14203 |
Margaret Brechtel | officer: EVP, Treas., CFO & Sec. | C/O RAND CAPITAL CORPORATION, 14 LAFAYETTE SQUARE, SUITE 1405, BUFFALO NY 14203 |
User-friendly Holding, Llc | 10 percent owner | 10200 GROGANS MILL RD., SUITE 440, THE WOODLANDS TX 77380 |
User-friendly Phone Book, Llc | 10 percent owner | 10200 GROGANS MILL RD., SUITE 440, THE WOODLANDS TX 77380 |
Newman Reginald B Ii | director | PRIOR AVIATION SERVICE INC., 50 NORTH AIRPORT DRIVE, BUFFALO NY 14225 |
Utility Service Holding Co., Inc. | 10 percent owner | P.O. BOX 240, WARTHEN GA 31094 |
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