Migdal Insurance & Financial Holdings 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 Migdal Insurance & Financial Holdings 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 * 0.083 | + | 0.528 * 1 | + | 0.404 * 1.0165 | + | 0.892 * 4.4211 | + | 0.115 * 0.9886 |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI |
| - | 0.172 * 0.2533 | + | 4.679 * -0.009827 | - | 0.327 * 1.0534 |
| = | -0.20 |
* 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 ₪1,772 Mil.
Revenue was 7534.396 + 5667.63 + 8883.903 + 6388.726 = ₪28,475 Mil.
Gross Profit was 7534.396 + 5667.63 + 8883.903 + 6388.726 = ₪28,475 Mil.
Total Current Assets was ₪42,772 Mil.
Total Assets was ₪204,860 Mil.
Property, Plant and Equipment(Net PPE) was ₪1,325 Mil.
Depreciation, Depletion and Amortization(DDA) was ₪191 Mil.
Selling, General, & Admin. Expense(SGA) was ₪635 Mil.
Total Current Liabilities was ₪4,018 Mil.
Long-Term Debt & Capital Lease Obligation was ₪5,937 Mil.
Net Income was 442.945 + 224.211 + -170.969 + 90.991 = ₪587 Mil.
Non Operating Income was 103.02 + 18.725 + 17.731 + 17.846 = ₪157 Mil.
Cash Flow from Operations was 2226.861 + -2852.121 + 1160.888 + 1907.329 = ₪2,443 Mil.
|
Total Receivables was ₪4,827 Mil.
Revenue was 5918.817 + 1263.543 + -2998.407 + 2256.662 = ₪6,441 Mil.
Gross Profit was 5918.817 + 1263.543 + -2998.407 + 2256.662 = ₪6,441 Mil.
Total Current Assets was ₪43,622 Mil.
Total Assets was ₪196,897 Mil.
Property, Plant and Equipment(Net PPE) was ₪1,271 Mil.
Depreciation, Depletion and Amortization(DDA) was ₪180 Mil.
Selling, General, & Admin. Expense(SGA) was ₪567 Mil.
Total Current Liabilities was ₪1,924 Mil.
Long-Term Debt & Capital Lease Obligation was ₪7,159 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) |
| = | (1772.254 / 28474.655) | / | (4827.394 / 6440.615) |
| = | 0.06224 | / | 0.749524 |
| | = | 0.083 |
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) |
| = | (6440.615 / 6440.615) | / | (28474.655 / 28474.655) |
| = | 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 - (42772.441 + 1325.239) / 204859.745) | / | (1 - (43621.933 + 1270.899) / 196896.541) |
| = | 0.784742 | / | 0.771998 |
| | = | 1.0165 |
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 |
| = | 28474.655 | / | 6440.615 |
| | = | 4.4211 |
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)) |
| = | (180.496 / (180.496 + 1270.899)) | / | (190.694 / (190.694 + 1325.239)) |
| = | 0.12436 | / | 0.125793 |
| | = | 0.9886 |
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) |
| = | (635.383 / 28474.655) | / | (567.447 / 6440.615) |
| = | 0.022314 | / | 0.088104 |
| | = | 0.2533 |
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) |
| = | ((5937.268 + 4017.696) / 204859.745) | / | ((7159.058 + 1924.04) / 196896.541) |
| = | 0.048594 | / | 0.046131 |
| | = | 1.0534 |
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 |
| = | (587.178 - 157.322 | - | 2442.957) | / | 204859.745 |
| | = | -0.009827 |
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.
Migdal Insurance & Financial Holdings has a M-score of -0.20 signals that the company is likely to be a manipulator.
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