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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
Abercrombie & Fitch Co has a M-score of -3.19 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Abercrombie & Fitch Co was 20.72. The lowest was -3.87. And the median was -2.67.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (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 Abercrombie & Fitch 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 * 0.8907||+||0.528 * 1.0465||+||0.404 * 1.151||+||0.892 * 0.9147||+||0.115 * 0.9009|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0229||+||4.679 * -0.1249||-||0.327 * 1.0568|
|This Year (Jul14) TTM:||Last Year (Jul13) TTM:|
|Accounts Receivable was $76 Mil.|
Revenue was 890.605 + 822.428 + 1299.137 + 1033.293 = $4,045 Mil.
Gross Profit was 552.956 + 511.659 + 767.106 + 651.04 = $2,483 Mil.
Total Current Assets was $1,077 Mil.
Total Assets was $2,563 Mil.
Property, Plant and Equipment(Net PPE) was $1,098 Mil.
Depreciation, Depletion and Amortization(DDA) was $234 Mil.
Selling, General & Admin. Expense(SGA) was $2,311 Mil.
Total Current Liabilities was $559 Mil.
Long-Term Debt was $172 Mil.
Net Income was 12.877 + -23.671 + 66.105 + -15.644 = $40 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 15.81 + -40.14 + 405.654 + -21.441 = $360 Mil.
|Accounts Receivable was $93 Mil.
Revenue was 945.698 + 838.769 + 1468.531 + 1169.649 = $4,423 Mil.
Gross Profit was 604.122 + 553.166 + 930.653 + 752.514 = $2,840 Mil.
Total Current Assets was $1,216 Mil.
Total Assets was $2,843 Mil.
Property, Plant and Equipment(Net PPE) was $1,253 Mil.
Depreciation, Depletion and Amortization(DDA) was $235 Mil.
Selling, General & Admin. Expense(SGA) was $2,470 Mil.
Total Current Liabilities was $579 Mil.
Long-Term Debt was $189 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(75.679 / 4045.463)||/||(92.886 / 4422.647)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(511.659 / 4422.647)||/||(552.956 / 4045.463)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (1076.893 + 1098.24) / 2563.176)||/||(1 - (1216.07 + 1252.841) / 2842.843)|
4. SGI = Sales Growth Index
Ratio of sales 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.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation 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))|
|=||(235.211 / (235.211 + 1252.841))||/||(233.689 / (233.689 + 1098.24))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses 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)|
|=||(2310.683 / 4045.463)||/||(2469.677 / 4422.647)|
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$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((172.437 + 559.224) / 2563.176)||/||((188.626 + 579.227) / 2842.843)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(39.667 - 0||-||359.883)||/||2563.176|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Abercrombie & Fitch Co has a M-score of -3.19 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Abercrombie & Fitch Co Annual Data
Abercrombie & Fitch Co Quarterly Data