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GuruFocus has detected 4 Warning Signs with Banco Santander SA $SAN.
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Banco Santander SA (NYSE:SAN)
Beneish M-Score
-1.98 (As of Today)

The zones of discrimination for M-Score is as such:

An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.

Banco Santander SA has a M-score of -2.02 signals that the company is a manipulator.

SAN' s Beneish M-Score Range Over the Past 10 Years
Min: -6.36   Max: -0.72
Current: -1.98

-6.36
-0.72

During the past 13 years, the highest Beneish M-Score of Banco Santander SA was -0.72. The lowest was -6.36. And the median was -2.29.


Definition

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (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 Banco Santander SA 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 * 1.2168+0.528 * 1+0.404 * 0.9992+0.892 * 0.9943+0.115 * 1.05
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0195+4.679 * -0.0143-0.327 * 0
=-2.02

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $6,734 Mil.
Revenue was 14077.0053476 + 11907.1729958 + 13407.4074074 + 13766.2921348 = $53,158 Mil.
Gross Profit was 14077.0053476 + 11907.1729958 + 13407.4074074 + 13766.2921348 = $53,158 Mil.
Total Current Assets was $0 Mil.
Total Assets was $1,445,942 Mil.
Property, Plant and Equipment(Net PPE) was $22,070 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,627 Mil.
Selling, General & Admin. Expense(SGA) was $22,576 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $0 Mil.
Net Income was 1996.79144385 + 1862.86919831 + 1902.35690236 + 1435.95505618 = $7,198 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was -1062.03208556 + 18407.1729958 + 11979.7979798 + -1388.76404494 = $27,936 Mil.
Accounts Receivable was $5,566 Mil.
Revenue was 13096.8819599 + 11867.1023965 + 13855.2188552 + 14643.0976431 = $53,462 Mil.
Gross Profit was 13096.8819599 + 11867.1023965 + 13855.2188552 + 14643.0976431 = $53,462 Mil.
Total Current Assets was $0 Mil.
Total Assets was $1,474,610 Mil.
Property, Plant and Equipment(Net PPE) was $21,331 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,682 Mil.
Selling, General & Admin. Expense(SGA) was $22,272 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $23,145 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in 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)
=(6733.68983957 / 53157.8778856) / (5565.70155902 / 53462.3008547)
=0.12667341 / 0.10410516
=1.2168

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)
=(53462.3008547 / 53462.3008547) / (53157.8778856 / 53157.8778856)
=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 plant, property 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 + 22069.5187166) / 1445942.24599) / (1 - (0 + 21330.7349666) / 1474610.24499)
=0.98473693 / 0.98553466
=0.9992

4. SGI = Sales Growth Index

Ratio of sales 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
=53157.8778856 / 53462.3008547
=0.9943

5. DEPI = Depreciation Index

Measured as the ratio of the rate of depreciation 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))
=(2681.74194306 / (2681.74194306 + 21330.7349666)) / (2626.74444312 / (2626.74444312 + 22069.5187166))
=0.11168119 / 0.10636202
=1.05

6. SGAI = Sales, General and Administrative expenses Index

The ratio of SGA expenses 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)
=(22575.6526166 / 53157.8778856) / (22271.5792068 / 53462.3008547)
=0.42469063 / 0.41658475
=1.0195

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$sgai= in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((0 + 0) / 1445942.24599) / ((23144.766147 + 0) / 1474610.24499)
=0 / 0.01569551
=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
=(7197.9726007 - 0 - 27936.1748451) / 1445942.24599
=-0.0143

An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.

Banco Santander SA has a M-score of -2.02 signals that the company is likely to be a manipulator.


Related Terms

Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Banco Santander SA Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 110.93690.8288010.8737
GMI 1111111
AQI 1.00231.0010.9991.00010.99431.00470.9956
SGI 1.02461.77131.11.12520.7021.08021.0376
DEPI 00.80441.0310.91921.64160.58521.4946
SGAI 1.9470.67590.81231.44210.99171.1980.9129
LVGI 0.12550.89490.75530.73429.60870.08190
TATA -0.00570.00810.00680.00450.0040.00360.0106
M-score -2.48-1.69-2.30-2.50-6.39-2.17-2.12

Banco Santander SA Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.873711111.0681.2168
GMI 1111111
AQI 0.99560.99631.0031.00331.00550.99880.9992
SGI 1.03760.95440.91180.85570.89740.89630.9943
DEPI 1.49461.25540.91770.90770.78561.10441.05
SGAI 0.91290.96550.96391.01790.90460.9241.0195
LVGI 00.950.92401.088700
TATA 0.01060.02250.02230.0153-0.0035-0.0026-0.0143
M-score -2.12-2.37-2.43-2.22-2.62-2.17-2.02
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