Farfetch Beneish M Score

FTCH
 Stock
  

USD 7.60  0.27  3.43%   

This module uses fundamental data of Farfetch to approximate the value of its Beneish M Score. Farfetch 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. Please check Farfetch Piotroski F Score and Farfetch Altman Z Score analysis.
  
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The current Debt to Equity Ratio is estimated to increase to 43.30, while Total Debt is projected to decrease to roughly 643.8 M. Farfetch Debt to Equity Ratio is most likely to increase significantly in the upcoming years. The last year's value of Debt to Equity Ratio was reported at 40.13. The current EBITDA Margin is estimated to increase to 0.86, while Asset Turnover is projected to decrease to 0.62.
At this time, it appears that Farfetch Ltd Cl is an unlikely manipulator. The earnings manipulation may begin if Farfetch's 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 Farfetch 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 Farfetch's 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.
-2.69
Beneish M Score - Unlikely Manipulator
Elasticity of Receivables1.0Focus
Asset Quality0.98Focus
Expense Coverage0.74Focus
Gross Margin Strengs0.98Focus
Accruals Factor0.74Focus
Depreciation Resistance0.86Focus
Net Sales Growth1.08Focus
Financial Leverage Condition0.99Focus

Farfetch Beneish M-Score Indicator Trends

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 Farfetch's 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.
Current ValueLast YearChange From Last Year 10 Year Trend
Revenues2.4 B2.3 B
Significantly Up
Increasing
Slightly volatile
Selling General and Administrative Expense1.2 B1.5 B
Significantly Down
Increasing
Slightly volatile
Net Cash Flow from Operations(289.6 M)(282.2 M)
Fairly Down
Decreasing
Slightly volatile
Depreciation Amortization and Accretion271 M251.2 M
Significantly Up
Increasing
Slightly volatile
Total Assets3.2 B3.8 B
Significantly Down
Increasing
Slightly volatile
Investments127.3 M118 M
Significantly Up
Increasing
Slightly volatile
Investments Current89.4 M90 M
Slightly Down
Decreasing
Slightly volatile
Investments Non Current19.4 M18 M
Significantly Up
Increasing
Slightly volatile
Property Plant and Equipment Net233.5 M292.6 M
Significantly Down
Increasing
Slightly volatile
Trade and Non Trade Receivables438 M405.9 M
Significantly Up
Increasing
Slightly volatile
Total Liabilities2.9 B3.6 B
Significantly Down
Increasing
Slightly volatile
Current Assets1.7 B2.1 B
Significantly Down
Increasing
Slightly volatile
Assets Non Current1.4 B1.7 B
Significantly Down
Increasing
Slightly volatile
Current Liabilities727.8 M907.3 M
Significantly Down
Increasing
Slightly volatile
Liabilities Non Current2.1 B2.6 B
Significantly Down
Increasing
Slightly volatile
Total Debt643.8 M753.4 M
Fairly Down
Increasing
Slightly volatile
Debt Current36.1 M43.3 M
Fairly Down
Increasing
Slightly volatile
Debt Non Current607.6 M710.1 M
Fairly Down
Increasing
Slightly volatile
Gross Margin0.440.45
Fairly Down
Decreasing
Slightly volatile

Farfetch Ltd Cl 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 Farfetch's different financial indicators related to revenue, expenses, operating profit, and net earnings helps investors identify and prioritize their investing strategies towards Farfetch in a much-optimized way. Analyzing correlations between earnings drivers directly associated with dollar figures is the most effective way to find Farfetch's degree of accounting gimmicks and manipulations.

About Farfetch Beneish M Score

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 Amortization and Accretion

271.03 Million

Share
Farfetch Depreciation Amortization and Accretion is most likely to increase significantly in the upcoming years. The last year's value of Depreciation Amortization and Accretion was reported at 251.2 Million

Farfetch 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 Farfetch. 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.
201720182019202020212022 (projected)
Revenues385.97 M602.38 M1.02 B1.67 B2.26 B2.43 B
Total Assets563.06 M1.35 B2.23 B3.59 B3.83 B3.15 B
Current Assets452.79 M1.2 B645.33 M1.96 B2.11 B1.74 B
Assets Non Current110.27 M151.98 M1.58 B1.63 B1.71 B1.41 B
Total Liabilities166.16 M222.96 M890.05 M5.25 B3.56 B2.86 B
Current Liabilities155.89 M194.16 M468 M778.75 M907.26 M727.75 M
Operating Income(94.49 M)(173.32 M)(429.57 M)(619.82 M)(476.24 M)(488.77 M)
Investments336 K652 K18.7 M10.6 M117.98 M127.29 M
Gross Margin0.480.530.50.450.460.44

About Farfetch Fundamental Analysis

The Macroaxis Fundamental Analysis modules help investors analyze Farfetch Ltd Cl's financials across various querterly and yearly statements, indicators and fundamental ratios. We help investors to determine the real value of Farfetch using virtually all public information available. We use both quantitative as well as qualitative analysis to arrive at the intrinsic value of Farfetch Ltd Cl 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.
Please read more on our fundamental analysis page.
Farfetch Limited, together with its subsidiaries, provides an online marketplace for luxury fashion goods in the United States, the United Kingdom, and internationally. Farfetch Limited was founded in 2007 and is headquartered in London, the United Kingdom. Farfetch operates under Internet Retail classification in the United States and is traded on New York Stock Exchange. It employs 6464 people.

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Please check Farfetch Piotroski F Score and Farfetch Altman Z Score analysis. Note that the Farfetch Ltd Cl information on this page should be used as a complementary analysis to other Farfetch's statistical models used to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try Money Managers module to screen money managers from public funds and ETFs managed around the world.

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When running Farfetch Ltd Cl price analysis, check to measure Farfetch's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy Farfetch is operating at the current time. Most of Farfetch's value examination focuses on studying past and present price action to predict the probability of Farfetch's future price movements. You can analyze the entity against its peers and financial market as a whole to determine factors that move Farfetch's price. Additionally, you may evaluate how the addition of Farfetch to your portfolios can decrease your overall portfolio volatility.
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Is Farfetch's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Farfetch. If investors know Farfetch will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Farfetch listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
The market value of Farfetch Ltd Cl is measured differently than its book value, which is the value of Farfetch that is recorded on the company's balance sheet. Investors also form their own opinion of Farfetch's value that differs from its market value or its book value, called intrinsic value, which is Farfetch's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Farfetch's market value can be influenced by many factors that don't directly affect Farfetch's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Farfetch's value and its price as these two are different measures arrived at by different means. Investors typically determine Farfetch value by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Farfetch's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.