Firm Capital Mortgage Investment (TSX:FC) Beneish M-Score : -2.59 (As of Apr. 25, 2024)

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What is Firm Capital Mortgage Investment Beneish M-Score?

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 -2.59 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

The historical rank and industry rank for Firm Capital Mortgage Investment's Beneish M-Score or its related term are showing as below:

TSX:FC' s Beneish M-Score Range Over the Past 10 Years
Min: -2.81 Med: -2.59 Max: -1.83
Current: -2.59

During the past 13 years, the highest Beneish M-Score of Firm Capital Mortgage Investment was -1.83. The lowest was -2.81. And the median was -2.59.

Firm Capital Mortgage Investment 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 Firm Capital Mortgage Investment 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 * 0.8145

0.528 * 1

0.404 * 0.9834

0.892 * 1.1722

0.115 * 1

0.172 * SGAI

4.679 * TATA

0.327 * LVGI

0.172 * 0.4774

4.679 * -0.049711

0.327 * 0.8242

-2.59

* 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 C$5.49 Mil.
Revenue was 14.165 + 9.911 + 11.423 + 15.016 = C$50.52 Mil.
Gross Profit was 14.165 + 9.911 + 11.423 + 15.016 = C$50.52 Mil.
Total Current Assets was C$14.86 Mil.
Total Assets was C$589.61 Mil.
Property, Plant and Equipment(Net PPE) was C$0.00 Mil.
Depreciation, Depletion and Amortization(DDA) was C$0.00 Mil.
Selling, General, & Admin. Expense(SGA) was C$1.80 Mil.
Total Current Liabilities was C$32.30 Mil.
Long-Term Debt & Capital Lease Obligation was C$158.12 Mil.
Net Income was 8.336 + 8.595 + 8.522 + 8.712 = C$34.17 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = C$0.00 Mil.
Cash Flow from Operations was 16.162 + 15.436 + 15.908 + 15.969 = C$63.48 Mil.

Total Receivables was C$5.75 Mil.
Revenue was 13.697 + 10.237 + 10.258 + 8.903 = C$43.10 Mil.
Gross Profit was 13.697 + 10.237 + 10.258 + 8.903 = C$43.10 Mil.
Total Current Assets was C$5.75 Mil.
Total Assets was C$656.18 Mil.
Property, Plant and Equipment(Net PPE) was C$0.00 Mil.
Depreciation, Depletion and Amortization(DDA) was C$0.00 Mil.
Selling, General, & Admin. Expense(SGA) was C$3.21 Mil.
Total Current Liabilities was C$78.85 Mil.
Long-Term Debt & Capital Lease Obligation was C$178.28 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)
	=	(5.488 / 50.515)	/	(5.748 / 43.095)
	=	0.108641	/	0.13338
	=	0.8145

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)
	=	(43.095 / 43.095)	/	(50.515 / 50.515)
	=	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 - (14.855 + 0) / 589.607)	/	(1 - (5.748 + 0) / 656.176)
	=	0.974805	/	0.99124
	=	0.9834

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
	=	50.515	/	43.095
	=	1.1722

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 + 0))	/	(0 / (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)
	=	(1.797 / 50.515)	/	(3.211 / 43.095)
	=	0.035574	/	0.07451
	=	0.4774

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)
	=	((158.122 + 32.295) / 589.607)	/	((178.284 + 78.845) / 656.176)
	=	0.322956	/	0.39186
	=	0.8242

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
	=	(34.165 - 0	-	63.475)	/	589.607
	=	-0.049711

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.

Firm Capital Mortgage Investment has a M-score of -2.59 suggests that the company is unlikely to be a manipulator.

Firm Capital Mortgage Investment Beneish M-Score Related Terms

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Firm Capital Mortgage Investment (TSX:FC) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Banks » Firm Capital Mortgage Investment Corp (TSX:FC) » Definitions » Beneish M-Score

Comparable Companies

Traded in Other Exchanges

FCMGF:USA 74X:Germany

Address

163 Cartwright Avenue, Toronto, ON, CAN, M6A 1V5

Website

https://www.firmcapital.com

Firm Capital Mortgage Investment Corp is a Canadian financial provider. It acts as a non-bank lender providing residential and commercial short-term bridge and conventional real estate financing, including construction, mezzanine, and equity investments. The company provides construction, equity and conventional real estate finance for include residential houses, small multi-family residential properties, mixed-use residential and others to the builder, developer, and real estate owner marketplace along with a high level of personal service to real estate investors. Also, it provides loan servicing, asset management, and related investment services. The company's revenue mainly comprises Interest and fee income and commission fees arising from Canada and United States.