Sealand Securities Co 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 Sealand Securities Co 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 | + | 0.528 * 1 | + | 0.404 * 1.0797 | + | 0.892 * 1.0127 | + | 0.115 * 1 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 0.9615 | + | 4.679 * -0.081046 | - | 0.327 * 0.7133 |
| = | -2.72 |
* 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 (Mar24) TTM: | Last Year (Mar23) TTM: |
Total Receivables was ¥0 Mil.
Revenue was 811.452 + 1141.636 + 947.696 + 1075.212 = ¥3,976 Mil.
Gross Profit was 811.452 + 1141.636 + 947.696 + 1075.212 = ¥3,976 Mil.
Total Current Assets was ¥33,791 Mil.
Total Assets was ¥75,931 Mil.
Property, Plant and Equipment(Net PPE) was ¥1,083 Mil.
Depreciation, Depletion and Amortization(DDA) was ¥0 Mil.
Selling, General, & Admin. Expense(SGA) was ¥2,199 Mil.
Total Current Liabilities was ¥1,255 Mil.
Long-Term Debt & Capital Lease Obligation was ¥11,419 Mil.
Net Income was 93.564 + -65.265 + 2.014 + 163.894 = ¥194 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = ¥0 Mil.
Cash Flow from Operations was 13025.34 + 3224.748 + -3883.262 + -6018.773 = ¥6,348 Mil.
|
Total Receivables was ¥0 Mil.
Revenue was 980.08 + 802.576 + 1119.813 + 1023.778 = ¥3,926 Mil.
Gross Profit was 980.08 + 802.576 + 1119.813 + 1023.778 = ¥3,926 Mil.
Total Current Assets was ¥39,109 Mil.
Total Assets was ¥81,412 Mil.
Property, Plant and Equipment(Net PPE) was ¥1,532 Mil.
Depreciation, Depletion and Amortization(DDA) was ¥0 Mil.
Selling, General, & Admin. Expense(SGA) was ¥2,258 Mil.
Total Current Liabilities was ¥1,300 Mil.
Long-Term Debt & Capital Lease Obligation was ¥17,753 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 / 3975.996) | / | (0 / 3926.247) |
| = | 0 | / | 0 |
| | = | 1 |
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) |
| = | (3926.247 / 3926.247) | / | (3975.996 / 3975.996) |
| = | 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 - (33790.698 + 1083.329) / 75930.546) | / | (1 - (39109.046 + 1531.964) / 81412.289) |
| = | 0.540711 | / | 0.5008 |
| | = | 1.0797 |
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 |
| = | 3975.996 | / | 3926.247 |
| | = | 1.0127 |
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 / (0 + 1531.964)) | / | (0 / (0 + 1083.329)) |
| = | 0 | / | 0 |
| | = | 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) |
| = | (2198.771 / 3975.996) | / | (2258.125 / 3926.247) |
| = | 0.553011 | / | 0.575136 |
| | = | 0.9615 |
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) |
| = | ((11419.347 + 1255.286) / 75930.546) | / | ((17752.683 + 1299.753) / 81412.289) |
| = | 0.166924 | / | 0.234024 |
| | = | 0.7133 |
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 |
| = | (194.207 - 0 | - | 6348.053) | / | 75930.546 |
| | = | -0.081046 |
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.
Sealand Securities Co has a M-score of -2.72 suggests that the company is unlikely to be a manipulator.
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