Lotte Non-Life Insurance 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 Lotte Non-Life Insurance 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 * 1.1801 | + | 0.528 * 1 | + | 0.404 * 1.0003 | + | 0.892 * 1.1361 | + | 0.115 * 1.0322 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 0.8386 | + | 4.679 * -0.002267 | - | 0.327 * 0.7678 |
| = | -2.10 |
* 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 ₩381,065 Mil.
Revenue was 479053.98 + 605780.194 + 578629.073 + 596365.182 = ₩2,259,828 Mil.
Gross Profit was 479053.98 + 605780.194 + 578629.073 + 596365.182 = ₩2,259,828 Mil.
Total Current Assets was ₩0 Mil.
Total Assets was ₩15,541,478 Mil.
Property, Plant and Equipment(Net PPE) was ₩62,429 Mil.
Depreciation, Depletion and Amortization(DDA) was ₩36,841 Mil.
Selling, General, & Admin. Expense(SGA) was ₩41,681 Mil.
Total Current Liabilities was ₩0 Mil.
Long-Term Debt & Capital Lease Obligation was ₩806,275 Mil.
Net Income was -60192.122 + 18158.996 + 25387.897 + 40866.632 = ₩24,221 Mil.
Non Operating Income was 194889.446 + -89098.263 + 89302.749 + 71396.231 = ₩266,490 Mil.
Cash Flow from Operations was -115707.815 + -274204.477 + 291264.145 + -108391.313 = ₩-207,039 Mil.
|
Total Receivables was ₩284,226 Mil.
Revenue was 571704.825 + 380057.495 + 483460.65 + 553889.234 = ₩1,989,112 Mil.
Gross Profit was 571704.825 + 380057.495 + 483460.65 + 553889.234 = ₩1,989,112 Mil.
Total Current Assets was ₩0 Mil.
Total Assets was ₩14,912,417 Mil.
Property, Plant and Equipment(Net PPE) was ₩64,885 Mil.
Depreciation, Depletion and Amortization(DDA) was ₩40,288 Mil.
Selling, General, & Admin. Expense(SGA) was ₩43,749 Mil.
Total Current Liabilities was ₩0 Mil.
Long-Term Debt & Capital Lease Obligation was ₩1,007,583 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) |
| = | (381064.619 / 2259828.429) | / | (284226.492 / 1989112.204) |
| = | 0.168625 | / | 0.142891 |
| | = | 1.1801 |
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) |
| = | (1989112.204 / 1989112.204) | / | (2259828.429 / 2259828.429) |
| = | 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 + 62429.363) / 15541477.89) | / | (1 - (0 + 64884.625) / 14912417.301) |
| = | 0.995983 | / | 0.995649 |
| | = | 1.0003 |
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 |
| = | 2259828.429 | / | 1989112.204 |
| | = | 1.1361 |
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)) |
| = | (40288.494 / (40288.494 + 64884.625)) | / | (36840.878 / (36840.878 + 62429.363)) |
| = | 0.383068 | / | 0.371117 |
| | = | 1.0322 |
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) |
| = | (41680.529 / 2259828.429) | / | (43748.642 / 1989112.204) |
| = | 0.018444 | / | 0.021994 |
| | = | 0.8386 |
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) |
| = | ((806274.778 + 0) / 15541477.89) | / | ((1007582.921 + 0) / 14912417.301) |
| = | 0.051879 | / | 0.067567 |
| | = | 0.7678 |
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 |
| = | (24221.403 - 266490.163 | - | -207039.46) | / | 15541477.89 |
| | = | -0.002267 |
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.
Lotte Non-Life Insurance Co has a M-score of -2.10 suggests that the company is unlikely to be a manipulator.
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