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# Randolph Bancorp (NAS:RNDB) Beneish M-Score

: -2.39 (As of Today)
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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.

Good Sign:

Beneish M-Score -2.39 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

The historical rank and industry rank for Randolph Bancorp's Beneish M-Score or its related term are showing as below:

RNDB' s Beneish M-Score Range Over the Past 10 Years
Min: -3.05   Med: -2.26   Max: -1.75
Current: -2.39

During the past 8 years, the highest Beneish M-Score of Randolph Bancorp was -1.75. The lowest was -3.05. And the median was -2.26.

## Randolph Bancorp 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 Randolph Bancorp 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 * 2.1017 + 0.528 * 1 + 0.404 * 1.0355 + 0.892 * 0.5308 + 0.115 * 1.5494 - 0.172 * SGAI + 4.679 * TATA - 0.327 * LVGI - 0.172 * 1.3287 + 4.679 * -0.1374 - 0.327 * 0.6327 = -2.39

* 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 (Jun22) TTM: Last Year (Jun21) TTM: Total Receivables was \$1.70 Mil. Revenue was 7.836 + 7.459 + 10.229 + 14.125 = \$39.65 Mil. Gross Profit was 7.836 + 7.459 + 10.229 + 14.125 = \$39.65 Mil. Total Current Assets was \$63.73 Mil. Total Assets was \$774.75 Mil. Property, Plant and Equipment(Net PPE) was \$7.67 Mil. Depreciation, Depletion and Amortization(DDA) was \$3.82 Mil. Selling, General, & Admin. Expense(SGA) was \$24.28 Mil. Total Current Liabilities was \$0.00 Mil. Long-Term Debt & Capital Lease Obligation was \$32.95 Mil. Net Income was 0.248 + -0.235 + 0.786 + 3.126 = \$3.93 Mil. Non Operating Income was 0 + 0 + 0 + 0 = \$0.00 Mil. Cash Flow from Operations was 15.937 + 18.777 + 67.847 + 7.844 = \$110.41 Mil. Total Receivables was \$1.52 Mil. Revenue was 12.015 + 17.514 + 20.627 + 24.543 = \$74.70 Mil. Gross Profit was 12.015 + 17.514 + 20.627 + 24.543 = \$74.70 Mil. Total Current Assets was \$86.61 Mil. Total Assets was \$744.14 Mil. Property, Plant and Equipment(Net PPE) was \$5.12 Mil. Depreciation, Depletion and Amortization(DDA) was \$5.44 Mil. Selling, General, & Admin. Expense(SGA) was \$34.42 Mil. Total Current Liabilities was \$0.00 Mil. Long-Term Debt & Capital Lease Obligation was \$50.02 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) = (1.699 / 39.649) / (1.523 / 74.699) = 0.04285102 / 0.02038849 = 2.1017

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) = (74.699 / 74.699) / (39.649 / 39.649) = 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 - (63.732 + 7.669) / 774.753) / (1 - (86.611 + 5.115) / 744.142) = 0.90784031 / 0.87673589 = 1.0355

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 = 39.649 / 74.699 = 0.5308

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)) = (5.437 / (5.437 + 5.115)) / (3.821 / (3.821 + 7.669)) = 0.51525777 / 0.33255004 = 1.5494

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) = (24.276 / 39.649) / (34.421 / 74.699) = 0.61227269 / 0.46079599 = 1.3287

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) = ((32.946 + 0) / 774.753) / ((50.016 + 0) / 744.142) = 0.04252452 / 0.06721298 = 0.6327

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 = (3.925 - 0 - 110.405) / 774.753 = -0.1374

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.

Randolph Bancorp has a M-score of -2.39 suggests that the company is unlikely to be a manipulator.

## Randolph Bancorp Beneish M-Score Related Terms

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