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GuruFocus has detected 2 Warning Signs with Abercrombie & Fitch Co $ANF.
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Abercrombie & Fitch Co (NYSE:ANF)
Beneish M-Score
-2.82 (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 -2.83 suggests that the company is not a manipulator.

ANF' s Beneish M-Score Range Over the Past 10 Years
Min: -3.98   Max: 20.69
Current: -2.82

-3.98
20.69

During the past 13 years, the highest Beneish M-Score of Abercrombie & Fitch Co was 20.69. The lowest was -3.98. And the median was -2.78.


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 * 1.1876+0.528 * 0.9992+0.404 * 1.012+0.892 * 0.9654+0.115 * 0.9629
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0071+4.679 * -0.1078-0.327 * 0.9429
=-2.83

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

This Year (Oct16) TTM:Last Year (Oct15) TTM:
Accounts Receivable was $71 Mil.
Revenue was 821.734 + 783.16 + 685.483 + 1112.93 = $3,403 Mil.
Gross Profit was 510.739 + 477.107 + 425.721 + 676.345 = $2,090 Mil.
Total Current Assets was $1,150 Mil.
Total Assets was $2,336 Mil.
Property, Plant and Equipment(Net PPE) was $828 Mil.
Depreciation, Depletion and Amortization(DDA) was $200 Mil.
Selling, General & Admin. Expense(SGA) was $2,026 Mil.
Total Current Liabilities was $526 Mil.
Long-Term Debt was $334 Mil.
Net Income was 7.881 + -13.129 + -39.587 + 57.741 = $13 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 79.237 + 18.424 + -76.283 + 243.401 = $265 Mil.
Accounts Receivable was $62 Mil.
Revenue was 878.572 + 817.756 + 709.422 + 1119.544 = $3,525 Mil.
Gross Profit was 559.787 + 509.862 + 411.549 + 681.885 = $2,163 Mil.
Total Current Assets was $1,213 Mil.
Total Assets was $2,513 Mil.
Property, Plant and Equipment(Net PPE) was $919 Mil.
Depreciation, Depletion and Amortization(DDA) was $212 Mil.
Selling, General & Admin. Expense(SGA) was $2,084 Mil.
Total Current Liabilities was $644 Mil.
Long-Term Debt was $336 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)
=(71.235 / 3403.307) / (62.132 / 3525.294)
=0.02093111 / 0.01762463
=1.1876

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)
=(2163.083 / 3525.294) / (2089.912 / 3403.307)
=0.61358939 / 0.61408271
=0.9992

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 - (1150.271 + 827.996) / 2336.468) / (1 - (1213.155 + 918.926) / 2512.744)
=0.15330875 / 0.15149295
=1.012

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
=3403.307 / 3525.294
=0.9654

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))
=(211.819 / (211.819 + 918.926)) / (199.982 / (199.982 + 827.996))
=0.18732694 / 0.19453918
=0.9629

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)
=(2025.802 / 3403.307) / (2083.704 / 3525.294)
=0.59524515 / 0.5910724
=1.0071

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)
=((333.839 + 526.122) / 2336.468) / ((336.461 + 644.41) / 2512.744)
=0.36806025 / 0.39035851
=0.9429

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
=(12.906 - 0 - 264.779) / 2336.468
=-0.1078

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 -2.83 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

Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15Jan16
DSRI 0.8671.1011.06252.03540.69480.99681.02780.74750.8561.1436
GMI 0.99870.9941.0011.04031.00611.04230.98220.99821.01241.0078
AQI 1.7471.49873.12080.91441.00950.94951.071.12611.06420.9929
SGI 1.19161.13010.92910.84061.18441.19871.08480.91270.90940.9398
DEPI 1.09180.92860.71990.86170.97241.01661.11310.85010.90730.9837
SGAI 0.99681.01061.11191.14940.94440.94621.00231.06670.99491.0211
LVGI 0.8270.93130.91260.95571.14431.15081.03991.03981.25781.0801
TATA -0.0712-0.1332-0.0767-0.1401-0.0803-0.071-0.1497-0.0424-0.104-0.1128
M-score -2.40-2.68-2.01-2.37-3.01-2.67-3.06-2.98-3.24-2.96

Abercrombie & Fitch Co Quarterly Data

Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16
DSRI 0.89070.81980.8560.95481.08881.06251.14361.08331.12111.1876
GMI 1.04651.04521.01241.01371.00610.99641.00780.9810.98670.9992
AQI 1.1511.0611.06421.02071.01451.00590.99290.99511.07651.012
SGI 0.91470.91540.90940.88550.87950.89850.93980.96250.97240.9654
DEPI 0.90090.95320.90730.9170.94470.95720.98370.98020.9550.9629
SGAI 1.02290.98750.99491.01321.02911.04411.02111.00911.00521.0071
LVGI 1.05681.20521.25781.30231.25441.1711.08011.05630.99980.9429
TATA -0.1249-0.1404-0.104-0.1043-0.1311-0.1303-0.1128-0.1144-0.0969-0.1078
M-score -3.19-3.40-3.24-3.21-3.20-3.19-2.96-3.01-2.83-2.83
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