This module uses fundamental data of Asian Paints to approximate the value of its Beneish M Score. Asian Paints M Score tells investors if the company management is likely to be manipulating earnings. The score is calculated using eight financial indicators that are adjusted by a specific multiplier. Please note, the M Score is a probabilistic model and cannot detect companies that manipulate their earnings with 100% accuracy. Check out Trending Equities to better understand how to build diversified portfolios, which includes a position in Asian Paints Limited. Also, note that the market value of any company could be closely tied with the direction of predictive economic indicators such as signals in board of governors.
Asian
Beneish M Score
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At present, Asian Paints' Short and Long Term Debt Total is projected to increase significantly based on the last few years of reporting. The current year's Net Debt is expected to grow to about 17.3 B, whereas Long Term Debt is forecasted to decline to about 350.4 M.
At this time, Asian Paints' M Score is inapplicable. The earnings manipulation may begin if Asian Paints' top management creates an artificial sense of financial success, forcing the stock price to be traded at a high price-earnings multiple than it should be. In general, excessive earnings management by Asian Paints executives may lead to removing some of the operating profits from subsequent periods to inflate earnings in the following periods. This way, the manipulation of Asian Paints' earnings can lead to misrepresentations of actual financial condition, taking the otherwise loyal stakeholders on to the path of questionable ethical practices and plain fraud.
The cure to earnings manipulation is the transparency of financial reporting. It will typically remove the temptation of the top executives to inflate earnings (i.e., to promote the idea of 'winning at any cost'). Because a healthy internal audit department can enhance transparency, the board should promote the auditors' access to all the record-keeping systems across the enterprise. For example, if Asian Paints' auditors report directly to the board (not management), the managers will be reluctant to manipulate simply due to the fear of punishment. On the other hand, the auditors will be free to investigate the ledgers properly because they know that the board has their back.
Asian Paints Limited Beneish M-Score Driver Matrix
One of the toughest challenges investors face today is learning how to quickly synthesize historical financial statements and information provided by the company, SEC reporting, and various external parties in order to detect the potential manipulation of earnings. Understanding the correlation between Asian Paints' different financial indicators related to revenue, expenses, operating profit, and net earnings helps investors identify and prioritize their investing strategies towards Asian Paints in a much-optimized way. Analyzing correlations between earnings drivers directly associated with dollar figures is the most effective way to find Asian Paints' degree of accounting gimmicks and manipulations.
M-Score is one of many grading techniques for value stocks. It was developed by Professor M. Daniel Beneish of the Kelley School of Business at Indiana University and published in 1999 under the paper titled The Detection of Earnings Manipulation. The Beneish score is a multi-factor model that utilizes financial identifiers to compile eight variables used to classify whether a company has manipulated its reported earnings. The variables are built from the officially filed financial statements to create a final score call 'M Score.' The score helps to identify companies that are likely to manipulate their profits if they show deteriorating gross margins, operating expenses, and leverage against growing revenue.
Depreciation And Amortization
8.96 Billion
At present, Asian Paints' Depreciation And Amortization is projected to increase significantly based on the last few years of reporting.
Asian Paints Earnings Manipulation Drivers
Although earnings manipulation is typically not the result of intentional misconduct by the c-level executives, it is still a widespread practice by the senior management of public companies such as Asian Paints. It is usually done by a series of misrepresentations of various accounting rules and operating activities across multiple financial cycles. The best way to spot the manipulation is to examine the historical financial statement to find inconsistencies in earning reports to find trends in assets or liabilities that are not sustainable in the future.
Some studies have found that companies with high sustainability scores are getting higher valuations than competitors with lower social-engagement activities. While most ESG disclosures are voluntary and do not directly affect the long term financial condition, Asian Paints' sustainability indicators can be used to identify proper investment strategies using environmental, social, and governance scores that are crucial to Asian Paints' managers, analysts, and investors.
Environment Score
Governance Score
Social Score
About Asian Paints Fundamental Analysis
The Macroaxis Fundamental Analysis modules help investors analyze Asian Paints Limited's financials across various querterly and yearly statements, indicators and fundamental ratios. We help investors to determine the real value of Asian Paints using virtually all public information available. We use both quantitative as well as qualitative analysis to arrive at the intrinsic value of Asian Paints Limited based on its fundamental data. In general, a quantitative approach, as applied to this company, focuses on analyzing financial statements comparatively, whereas a qaualitative method uses data that is important to a company's growth but cannot be measured and presented in a numerical way.
Analyzing currently trending equities could be an opportunity to develop a better portfolio based on different market momentums that they can trigger. Utilizing the top trending stocks is also useful when creating a market-neutral strategy or pair trading technique involving a short or a long position in a currently trending equity.
Asian Paints financial ratios help investors to determine whether Asian Stock is cheap or expensive when compared to a particular measure, such as profits or enterprise value. In other words, they help investors to determine the cost of investment in Asian with respect to the benefits of owning Asian Paints security.