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JPMorgan Chase (XSGO:JPM) Beneish M-Score : -2.52 (As of Apr. 28, 2024)


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What is JPMorgan Chase 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 -2.52 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

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

XSGO:JPM' s Beneish M-Score Range Over the Past 10 Years
Min: -2.83   Med: -2.39   Max: -2.08
Current: -2.52

During the past 13 years, the highest Beneish M-Score of JPMorgan Chase was -2.08. The lowest was -2.83. And the median was -2.39.


JPMorgan Chase 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 JPMorgan Chase 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 * 0.7104+0.528 * 1+0.404 * 1.0052+0.892 * 1.2072+0.115 * 1.0165
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9286+4.679 * 0.009439-0.327 * 1.0497
=-2.52

* 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 $107,363 Mil.
Revenue was 38600 + 39761 + 38582 + 38348 = $155,291 Mil.
Gross Profit was 38600 + 39761 + 38582 + 38348 = $155,291 Mil.
Total Current Assets was $923,999 Mil.
Total Assets was $3,875,393 Mil.
Property, Plant and Equipment(Net PPE) was $30,157 Mil.
Depreciation, Depletion and Amortization(DDA) was $7,512 Mil.
Selling, General, & Admin. Expense(SGA) was $51,056 Mil.
Total Current Liabilities was $362,666 Mil.
Long-Term Debt & Capital Lease Obligation was $391,825 Mil.
Net Income was 9307 + 13151 + 14472 + 12622 = $49,552 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 60231 + 45119 + 18865 + -111241 = $12,974 Mil.
Total Receivables was $125,189 Mil.
Revenue was 34512 + 32702 + 30709 + 30718 = $128,641 Mil.
Gross Profit was 34512 + 32702 + 30709 + 30718 = $128,641 Mil.
Total Current Assets was $889,122 Mil.
Total Assets was $3,665,743 Mil.
Property, Plant and Equipment(Net PPE) was $27,734 Mil.
Depreciation, Depletion and Amortization(DDA) was $7,051 Mil.
Selling, General, & Admin. Expense(SGA) was $45,547 Mil.
Total Current Liabilities was $384,009 Mil.
Long-Term Debt & Capital Lease Obligation was $295,865 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)
=(107363 / 155291) / (125189 / 128641)
=0.691367 / 0.973166
=0.7104

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)
=(128641 / 128641) / (155291 / 155291)
=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 - (923999 + 30157) / 3875393) / (1 - (889122 + 27734) / 3665743)
=0.753791 / 0.749885
=1.0052

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
=155291 / 128641
=1.2072

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))
=(7051 / (7051 + 27734)) / (7512 / (7512 + 30157))
=0.202702 / 0.199421
=1.0165

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)
=(51056 / 155291) / (45547 / 128641)
=0.328776 / 0.354063
=0.9286

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)
=((391825 + 362666) / 3875393) / ((295865 + 384009) / 3665743)
=0.194688 / 0.185467
=1.0497

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
=(49552 - 0 - 12974) / 3875393
=0.009439

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.

JPMorgan Chase has a M-score of -2.52 suggests that the company is unlikely to be a manipulator.


JPMorgan Chase Beneish M-Score Related Terms

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JPMorgan Chase (XSGO:JPM) Business Description

Address
383 Madison Avenue, New York, NY, USA, 10179
JPMorgan Chase is one of the largest and most complex financial institutions in the United States, with nearly $4 trillion in assets. It is organized into four major segments--consumer and community banking, corporate and investment banking, commercial banking, and asset and wealth management. JPMorgan operates, and is subject to regulation, in multiple countries.