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Power Financial (TSX:PWF.PR.Q.PFD) Beneish M-Score : -2.45 (As of Dec. 14, 2024)


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What is Power Financial 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 -2.45 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

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

TSX:PWF.PR.Q.PFD' s Beneish M-Score Range Over the Past 10 Years
Min: -3.81   Med: -2.51   Max: 0.6
Current: -2.45

During the past 13 years, the highest Beneish M-Score of Power Financial was 0.60. The lowest was -3.81. And the median was -2.51.


Power 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 Power 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 * 1+0.528 * 1+0.404 * 1.0002+0.892 * 1.1788+0.115 * 1
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8748+4.679 * -0.015189-0.327 * 1.2452
=-2.45

* 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 (Sep20) TTM:Last Year (Sep19) TTM:
Total Receivables was C$0.00 Mil.
Revenue was 14515 + 20446 + 11024 + 11485 = C$57,470.00 Mil.
Gross Profit was 14515 + 20446 + 11024 + 11485 = C$57,470.00 Mil.
Total Current Assets was C$0.00 Mil.
Total Assets was C$495,355.00 Mil.
Property, Plant and Equipment(Net PPE) was C$1,916.00 Mil.
Depreciation, Depletion and Amortization(DDA) was C$0.00 Mil.
Selling, General, & Admin. Expense(SGA) was C$6,408.00 Mil.
Total Current Liabilities was C$0.00 Mil.
Long-Term Debt & Capital Lease Obligation was C$11,380.00 Mil.
Net Income was 537 + 710 + 364 + 436 = C$2,047.00 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = C$0.00 Mil.
Cash Flow from Operations was 4447 + 1730 + 1984 + 1410 = C$9,571.00 Mil.
Total Receivables was C$0.00 Mil.
Revenue was 15158 + 3511 + 17648 + 12438 = C$48,755.00 Mil.
Gross Profit was 15158 + 3511 + 17648 + 12438 = C$48,755.00 Mil.
Total Current Assets was C$0.00 Mil.
Total Assets was C$466,573.00 Mil.
Property, Plant and Equipment(Net PPE) was C$1,919.00 Mil.
Depreciation, Depletion and Amortization(DDA) was C$0.00 Mil.
Selling, General, & Admin. Expense(SGA) was C$6,214.00 Mil.
Total Current Liabilities was C$0.00 Mil.
Long-Term Debt & Capital Lease Obligation was C$8,608.00 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 / 57470) / (0 / 48755)
=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)
=(48755 / 48755) / (57470 / 57470)
=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 + 1916) / 495355) / (1 - (0 + 1919) / 466573)
=0.996132 / 0.995887
=1.0002

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
=57470 / 48755
=1.1788

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 + 1919)) / (0 / (0 + 1916))
=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)
=(6408 / 57470) / (6214 / 48755)
=0.111502 / 0.127454
=0.8748

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)
=((11380 + 0) / 495355) / ((8608 + 0) / 466573)
=0.022973 / 0.018449
=1.2452

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
=(2047 - 0 - 9571) / 495355
=-0.015189

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.

Power Financial has a M-score of -2.45 suggests that the company is unlikely to be a manipulator.


Power Financial Beneish M-Score Related Terms

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Power Financial Business Description

Address
751 Victoria Square, Montreal, QC, CAN, H2Y 2J3
Power Financial Corp, a subsidiary of Power Corporation of Canada, is a diversified management and holding company with interests in the financial services industry through its controlling interests in Great-West Life and IGM Financial. It also has holdings in Pargesa, a diversified industrial group based in Europe. Its segments include Lifeco IGM Financial and the GBL. The company's portfolio includes insurance, retirement, wealth management, and investment businesses, as well as a range of alternative asset investment platforms.