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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.
During the past 13 years, the highest Beneish M-Score of Ascena Retail Group Inc was 4.98. The lowest was -3.89. And the median was -2.72.
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 Ascena Retail Group Inc 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 * 0.8214||+||0.528 * 0.9937||+||0.404 * 1.7695||+||0.892 * 1.4565||+||0.115 * 0.8715|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9891||+||4.679 * -0.0832||-||0.327 * 1.4836|
|This Year (Jul16) TTM:||Last Year (Jul15) TTM:|
|Accounts Receivable was $85 Mil.|
Revenue was 1812.3 + 1669.3 + 1841.8 + 1672 = $6,995 Mil.
Gross Profit was 1041.3 + 1016.7 + 958.1 + 896.1 = $3,912 Mil.
Total Current Assets was $1,240 Mil.
Total Assets was $5,506 Mil.
Property, Plant and Equipment(Net PPE) was $1,630 Mil.
Depreciation, Depletion and Amortization(DDA) was $359 Mil.
Selling, General & Admin. Expense(SGA) was $3,382 Mil.
Total Current Liabilities was $1,014 Mil.
Long-Term Debt was $1,982 Mil.
Net Income was 13.8 + 15 + -22.6 + -18.1 = $-12 Mil.
Non Operating Income was 0 + 0 + 0.8 + 0 = $1 Mil.
Cash Flow from Operations was 282 + 2.2 + 207.6 + -46.4 = $445 Mil.
|Accounts Receivable was $71 Mil.
Revenue was 1169.8 + 1150.3 + 1288.6 + 1194.2 = $4,803 Mil.
Gross Profit was 637.6 + 675.1 + 662 + 694.5 = $2,669 Mil.
Total Current Assets was $950 Mil.
Total Assets was $2,906 Mil.
Property, Plant and Equipment(Net PPE) was $1,170 Mil.
Depreciation, Depletion and Amortization(DDA) was $218 Mil.
Selling, General & Admin. Expense(SGA) was $2,348 Mil.
Total Current Liabilities was $718 Mil.
Long-Term Debt was $348 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)|
|=||(84.7 / 6995.4)||/||(70.8 / 4802.9)|
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)|
|=||(2669.2 / 4802.9)||/||(3912.2 / 6995.4)|
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 - (1240 + 1630.1) / 5506.3)||/||(1 - (949.9 + 1170) / 2906.2)|
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))|
|=||(218.2 / (218.2 + 1170))||/||(358.7 / (358.7 + 1630.1))|
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)|
|=||(3382.3 / 6995.4)||/||(2347.8 / 4802.9)|
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)|
|=||((1981.6 + 1013.7) / 5506.3)||/||((347.9 + 717.7) / 2906.2)|
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|
|=||(-11.9 - 0.8||-||445.4)||/||5506.3|
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.
Ascena Retail Group Inc has a M-score of -2.49 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
Ascena Retail Group Inc Annual Data
Ascena Retail Group Inc Quarterly Data