IGM Financial 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 IGM Financial 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 * 0.9682 | + | 0.528 * 1.0006 | + | 0.404 * 1.0012 | + | 0.892 * 1.0961 | + | 0.115 * 1 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 1.1562 | + | 4.679 * -0.017994 | - | 0.327 * 0.9407 |
| = | -2.51 |
* 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 (Mar25) TTM: | Last Year (Mar24) TTM: |
Total Receivables was C$5,854.17 Mil.
Revenue was 905.148 + 926.429 + 879.476 + 845.862 = C$3,556.92 Mil.
Gross Profit was 820.056 + -619.792 + 796.698 + 764.79 = C$1,761.75 Mil.
Total Current Assets was C$0.00 Mil.
Total Assets was C$20,225.19 Mil.
Property, Plant and Equipment(Net PPE) was C$311.05 Mil.
Depreciation, Depletion and Amortization(DDA) was C$0.00 Mil.
Selling, General, & Admin. Expense(SGA) was C$140.17 Mil.
Total Current Liabilities was C$0.00 Mil.
Long-Term Debt & Capital Lease Obligation was C$5,076.21 Mil.
Net Income was 233.777 + 254.761 + 239.181 + 216.187 = C$943.91 Mil.
Non Operating Income was 55.743 + 53.107 + 56.455 + 51.515 = C$216.82 Mil.
Cash Flow from Operations was 70.08 + 358.677 + 341.391 + 320.868 = C$1,091.02 Mil.
|
Total Receivables was C$5,516.32 Mil.
Revenue was 840.058 + 794.882 + 811.03 + 799.242 = C$3,245.21 Mil.
Gross Profit was 759.966 + -603.803 + 732.382 + 719.819 = C$1,608.36 Mil.
Total Current Assets was C$0.00 Mil.
Total Assets was C$18,432.21 Mil.
Property, Plant and Equipment(Net PPE) was C$305.93 Mil.
Depreciation, Depletion and Amortization(DDA) was C$0.00 Mil.
Selling, General, & Admin. Expense(SGA) was C$110.61 Mil.
Total Current Liabilities was C$0.00 Mil.
Long-Term Debt & Capital Lease Obligation was C$4,917.82 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) |
| = | (5854.174 / 3556.915) | / | (5516.318 / 3245.212) |
| = | 1.645857 | / | 1.699833 |
| | = | 0.9682 |
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) |
| = | (1608.364 / 3245.212) | / | (1761.752 / 3556.915) |
| = | 0.495611 | / | 0.495303 |
| | = | 1.0006 |
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 + 311.049) / 20225.185) | / | (1 - (0 + 305.927) / 18432.212) |
| = | 0.984621 | / | 0.983403 |
| | = | 1.0012 |
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 |
| = | 3556.915 | / | 3245.212 |
| | = | 1.0961 |
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 + 305.927)) | / | (0 / (0 + 311.049)) |
| = | 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) |
| = | (140.17 / 3556.915) | / | (110.605 / 3245.212) |
| = | 0.039408 | / | 0.034083 |
| | = | 1.1562 |
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) |
| = | ((5076.208 + 0) / 20225.185) | / | ((4917.824 + 0) / 18432.212) |
| = | 0.250985 | / | 0.266806 |
| | = | 0.9407 |
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 |
| = | (943.906 - 216.82 | - | 1091.016) | / | 20225.185 |
| | = | -0.017994 |
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.
IGM Financial has a M-score of -2.51 suggests that the company is unlikely to be a manipulator.
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