The Carlyle Group 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 The Carlyle Group 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 * 0.5153 | + | 0.528 * 1 | + | 0.404 * 1.0005 | + | 0.892 * 2.5312 | + | 0.115 * 1.067 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 0.4026 | + | 4.679 * 0.075858 | - | 0.327 * 0.9404 |
| = | -1.08 |
* 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 (Dec24) TTM: | Last Year (Dec23) TTM: |
Total Receivables was €996 Mil.
Revenue was 736.592 + 1166.254 + 685.509 + 550.896 = €3,139 Mil.
Gross Profit was 736.592 + 1166.254 + 685.509 + 550.896 = €3,139 Mil.
Total Current Assets was €0 Mil.
Total Assets was €22,064 Mil.
Property, Plant and Equipment(Net PPE) was €503 Mil.
Depreciation, Depletion and Amortization(DDA) was €171 Mil.
Selling, General, & Admin. Expense(SGA) was €616 Mil.
Total Current Liabilities was €0 Mil.
Long-Term Debt & Capital Lease Obligation was €9,069 Mil.
Net Income was 201.41 + 536.726 + 137.678 + 60.352 = €936 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = €0 Mil.
Cash Flow from Operations was -336.924 + 713.502 + -1179.551 + 65.412 = €-738 Mil.
|
Total Receivables was €763 Mil.
Revenue was -342.683 + 587.78 + 403.443 + 591.689 = €1,240 Mil.
Gross Profit was -342.683 + 587.78 + 403.443 + 591.689 = €1,240 Mil.
Total Current Assets was €0 Mil.
Total Assets was €19,418 Mil.
Property, Plant and Equipment(Net PPE) was €453 Mil.
Depreciation, Depletion and Amortization(DDA) was €168 Mil.
Selling, General, & Admin. Expense(SGA) was €605 Mil.
Total Current Liabilities was €0 Mil.
Long-Term Debt & Capital Lease Obligation was €8,487 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) |
| = | (995.779 / 3139.251) | / | (763.494 / 1240.229) |
| = | 0.317203 | / | 0.615607 |
| | = | 0.5153 |
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) |
| = | (1240.229 / 1240.229) | / | (3139.251 / 3139.251) |
| = | 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 + 502.999) / 22063.843) | / | (1 - (0 + 452.723) / 19418.392) |
| = | 0.977203 | / | 0.976686 |
| | = | 1.0005 |
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 |
| = | 3139.251 | / | 1240.229 |
| | = | 2.5312 |
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)) |
| = | (167.6 / (167.6 + 452.723)) | / | (170.553 / (170.553 + 502.999)) |
| = | 0.270182 | / | 0.253214 |
| | = | 1.067 |
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) |
| = | (616.057 / 3139.251) | / | (604.554 / 1240.229) |
| = | 0.196243 | / | 0.487454 |
| | = | 0.4026 |
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) |
| = | ((9068.967 + 0) / 22063.843) | / | ((8487.385 + 0) / 19418.392) |
| = | 0.411033 | / | 0.43708 |
| | = | 0.9404 |
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 |
| = | (936.166 - 0 | - | -737.561) | / | 22063.843 |
| | = | 0.075858 |
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.
The Carlyle Group has a M-score of -1.08 signals that the company is likely to be a manipulator.
Quick Browse
Personalize
Premium Gurus 
Create New Portfolio
Portfolio Contest
STU:3VU has been successfully added to your