HG Holdings (HG Holdings) Beneish M-Score

: -2.93 (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 -2.93 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

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

STLY' s Beneish M-Score Range Over the Past 10 Years
Min: -4.05 Med: -2.55 Max: -0.36
Current: -2.93

During the past 13 years, the highest Beneish M-Score of HG Holdings was -0.36. The lowest was -4.05. And the median was -2.55.

HG Holdings 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 HG Holdings for today is based on a combination of the following eight different indices:

-4.84

0.92 * DSRI

0.528 * GMI

0.404 * AQI

0.892 * SGI

0.115 * DEPI

-4.84

0.92 * 1.206

0.528 * 1

0.404 * 0.918

0.892 * 0.8067

0.115 * 0.6426

0.172 * SGAI

4.679 * TATA

0.327 * LVGI

0.172 * 1.5729

4.679 * -0.059779

0.327 * 1.0561

-2.93

* 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 (Dec23) TTM:

Last Year (Dec22) TTM:

Total Receivables was $0.43 Mil.
Revenue was 2.549 + 3.537 + 3.962 + 2.197 = $12.25 Mil.
Gross Profit was 2.549 + 3.537 + 3.962 + 2.197 = $12.25 Mil.
Total Current Assets was $12.80 Mil.
Total Assets was $41.90 Mil.
Property, Plant and Equipment(Net PPE) was $0.70 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.16 Mil.
Selling, General, & Admin. Expense(SGA) was $12.99 Mil.
Total Current Liabilities was $1.09 Mil.
Long-Term Debt & Capital Lease Obligation was $0.59 Mil.
Net Income was -0.354 + 0.251 + 0.08 + -0.799 = $-0.82 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.00 Mil.
Cash Flow from Operations was -3.921 + -0.309 + -4.931 + 10.844 = $1.68 Mil.

Total Receivables was $0.44 Mil.
Revenue was 5.117 + 6.147 + 2.179 + 1.737 = $15.18 Mil.
Gross Profit was 5.117 + 6.147 + 2.179 + 1.737 = $15.18 Mil.
Total Current Assets was $9.90 Mil.
Total Assets was $41.10 Mil.
Property, Plant and Equipment(Net PPE) was $0.85 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.12 Mil.
Selling, General, & Admin. Expense(SGA) was $10.24 Mil.
Total Current Liabilities was $0.86 Mil.
Long-Term Debt & Capital Lease Obligation was $0.70 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)
	=	(0.429 / 12.245)	/	(0.441 / 15.18)
	=	0.035035	/	0.029051
	=	1.206

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)
	=	(15.18 / 15.18)	/	(12.245 / 12.245)
	=	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 - (12.798 + 0.702) / 41.904)	/	(1 - (9.899 + 0.854) / 41.103)
	=	0.677835	/	0.738389
	=	0.918

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
	=	12.245	/	15.18
	=	0.8067

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))
	=	(0.117 / (0.117 + 0.854))	/	(0.162 / (0.162 + 0.702))
	=	0.120494	/	0.1875
	=	0.6426

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)
	=	(12.992 / 12.245)	/	(10.24 / 15.18)
	=	1.061004	/	0.674572
	=	1.5729

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)
	=	((0.59 + 1.094) / 41.904)	/	((0.703 + 0.861) / 41.103)
	=	0.040187	/	0.038051
	=	1.0561

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
	=	(-0.822 - 0	-	1.683)	/	41.904
	=	-0.059779

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.

HG Holdings has a M-score of -2.93 suggests that the company is unlikely to be a manipulator.

HG Holdings Beneish M-Score Related Terms

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HG Holdings (HG Holdings) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Diversified Financial Services » HG Holdings Inc (OTCPK:STLY) » Definitions » Beneish M-Score

Comparable Companies

Traded in Other Exchanges

N/A

Address

2115 East 7th Street, Suite 101, Charlotte, NC, USA, 28204

Website

https://www.hgholdingsinc.net

HG Holdings, Inc, together with its consolidated subsidiaries, operates through its wholly owned subsidiarie. The Company engages in the business of providing title insurance through the subsidiary NCTIC and providing title agency services through the subsidiaries NCTG, TAV, and Omega. Through NCTIC, the Company underwrites land title insurance for owners and mortgagees as the primary insurer. The Company currently only provides title insurance services in the state of Florida.

Executives

Peter Mark Sherman	director	4409 MICKLETON ROAD, CHARLOTTE NC 28226
Justin Hayles Edenfield	officer: Prin. Accting & Fin. Officer	6265 OLD WATER OAK ROAD, SUITE 204, TALLAHASSEE FL 32312
Hale Partnership Capital Management, Llc	10 percent owner	5960 FAIRVIEW ROAD, SUITE 432, CHARLOTTE NC 28210
Solas Capital Management, Llc	10 percent owner	1063 POST ROAD, 2ND FLOOR, DARIEN CT 06820
Hale Partnership Fund, L.p.	10 percent owner	3335 PARK SOUTH STATION BLVD., CHARLOTTE NC 28210
Matthew Hultquist	director	ONE CORPORATE CENTER, RYE NY 10580
Bradley G Garner	officer: CFO and CAO	2115 E. 7TH STREET, SUITE 101, CHARLOTTE NC 28211
Hale Steven A Ii	director, 10 percent owner	5960 FAIRVIEW ROAD, SUITE 432, CHARLOTTE NC 28210
Matthew Wood Smith	officer: Interim Chief Exec. Officer	200 N. HAMILTON STREET, HIGH POINT NC 27260
Jeffrey Stuart Gilliam	director	200 N. HAMILTON STREET, NO. 200, HIGH POINT NC 27260
Tucker Golden Frederick	10 percent owner	C/O SOLAS CAPITAL MANAGEMENT, LLC, 1063 POST ROAD, 2ND FLOOR, DARIEN CT 06820
Michael P Haley	director	200 NORTH HAMILTON STREET, NO. 200, HIGH POINT NC 27260
Talanta Investment Group, Llc	director, 10 percent owner	401 N. TRYON STREET, 10TH FLOOR, CHARLOTTE NC 28202
Justyn Rendal Putnam	director	200 N. HAMILTON STREET, NO. 200, HIGH POINT NC 27260
Ian Dundee Lapey	director	200 N. HAMILTON STREET, NO. 200, HIGH POINT NC 27260