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GuruFocus has detected 5 Warning Signs with Abercrombie & Fitch Co $ANF.
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Abercrombie & Fitch Co (NYSE:ANF)
Beneish M-Score
-2.22 (As of Today)

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 -2.22 suggests that the company is not a manipulator.

ANF' s Beneish M-Score Range Over the Past 10 Years
Min: -3.7   Max: 20.74
Current: -2.22

-3.7
20.74

During the past 13 years, the highest Beneish M-Score of Abercrombie & Fitch Co was 20.74. The lowest was -3.70. And the median was -2.69.


Definition

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 * 1.7369+0.528 * 1.0056+0.404 * 0.9769+0.892 * 0.9455+0.115 * 1.0069
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0358+4.679 * -0.0787-0.327 * 0.9707
=-2.22

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Jan17) TTM:Last Year (Jan16) TTM:
Accounts Receivable was $93 Mil.
Revenue was 1036.363 + 821.734 + 783.16 + 685.483 = $3,327 Mil.
Gross Profit was 615.001 + 510.739 + 477.107 + 425.721 = $2,029 Mil.
Total Current Assets was $1,139 Mil.
Total Assets was $2,296 Mil.
Property, Plant and Equipment(Net PPE) was $825 Mil.
Depreciation, Depletion and Amortization(DDA) was $195 Mil.
Selling, General & Admin. Expense(SGA) was $2,032 Mil.
Total Current Liabilities was $486 Mil.
Long-Term Debt was $309 Mil.
Net Income was 48.791 + 7.881 + -13.129 + -39.587 = $4 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 163.213 + 79.237 + 18.424 + -76.283 = $185 Mil.
Accounts Receivable was $57 Mil.
Revenue was 1112.93 + 878.572 + 817.756 + 709.422 = $3,519 Mil.
Gross Profit was 676.345 + 559.787 + 509.862 + 411.549 = $2,158 Mil.
Total Current Assets was $1,179 Mil.
Total Assets was $2,433 Mil.
Property, Plant and Equipment(Net PPE) was $894 Mil.
Depreciation, Depletion and Amortization(DDA) was $214 Mil.
Selling, General & Admin. Expense(SGA) was $2,075 Mil.
Total Current Liabilities was $535 Mil.
Long-Term Debt was $334 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in 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)
=(93.384 / 3326.74) / (56.868 / 3518.68)
=0.02807072 / 0.01616174
=1.7369

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)
=(2157.543 / 3518.68) / (2028.568 / 3326.74)
=0.61316829 / 0.60977654
=1.0056

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 plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (1139.3 + 824.738) / 2295.757) / (1 - (1178.98 + 894.178) / 2433.039)
=0.14449221 / 0.14791419
=0.9769

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=3326.74 / 3518.68
=0.9455

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))
=(213.68 / (213.68 + 894.178)) / (195.414 / (195.414 + 824.738))
=0.1928767 / 0.19155381
=1.0069

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)
=(2031.662 / 3326.74) / (2074.535 / 3518.68)
=0.61070658 / 0.58957763
=1.0358

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)
=((309.389 + 486) / 2295.757) / ((333.675 + 534.703) / 2433.039)
=0.34646045 / 0.35691084
=0.9707

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
=(3.956 - 0 - 184.591) / 2295.757
=-0.0787

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 -2.22 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Abercrombie & Fitch Co Annual Data

Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15Jan16Jan17
DSRI 1.1011.04562.06820.75510.91721.02780.74750.8561.14361.7369
GMI 0.9941.00391.03721.00851.05280.97010.99821.01241.00781.0056
AQI 1.49873.01480.94651.02180.95931.04641.12611.06420.99290.9769
SGI 1.13010.94410.82721.18441.19871.08480.91270.90940.93980.9455
DEPI 0.92860.71990.86170.96881.02041.11310.85010.90730.98371.0069
SGAI 1.01061.14751.11370.94440.97470.97591.06350.99491.02111.0358
LVGI 0.93130.91260.95571.15371.17641.0091.03981.25781.08010.9707
TATA -0.1332-0.0767-0.1424-0.0819-0.0779-0.1497-0.0424-0.104-0.1128-0.0787
M-score -2.68-2.06-2.34-2.96-2.78-3.06-2.98-3.24-2.96-2.22

Abercrombie & Fitch Co Quarterly Data

Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17
DSRI 0.81980.8560.95481.08881.06251.14361.08331.12111.18761.7369
GMI 1.0391.01241.01371.00610.99641.00780.9810.98670.99921.0056
AQI 1.0611.06421.02071.01451.00590.99290.99511.07651.0120.9769
SGI 0.91540.90940.88550.87950.89850.93980.96250.97240.96540.9455
DEPI 0.95320.90730.9170.94470.95720.98370.98020.9550.96291.0069
SGAI 0.91270.99491.01321.02911.08731.02111.00911.00521.00711.0358
LVGI 1.20521.25781.30231.25441.1711.08011.05630.99980.94290.9707
TATA -0.1404-0.104-0.1043-0.1311-0.1303-0.1128-0.1144-0.0969-0.1078-0.0787
M-score -3.39-3.24-3.21-3.20-3.20-2.96-3.01-2.83-2.83-2.22
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