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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 4.90. The lowest was -3.46. And the median was -2.70.
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 * 1||+||0.528 * 0.9913||+||0.404 * 0.9247||+||0.892 * 1.003||+||0.115 * 1.1482|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0383||+||4.679 * -0.0689||-||0.327 * 0.973|
|This Year (Oct14) TTM:||Last Year (Oct13) TTM:|
|Accounts Receivable was $0 Mil.|
Revenue was 1194.2 + 1182.4 + 1145.1 + 1266.5 = $4,788 Mil.
Gross Profit was 694.5 + 586.7 + 675 + 688.3 = $2,645 Mil.
Total Current Assets was $997 Mil.
Total Assets was $3,233 Mil.
Property, Plant and Equipment(Net PPE) was $1,138 Mil.
Depreciation, Depletion and Amortization(DDA) was $198 Mil.
Selling, General & Admin. Expense(SGA) was $2,205 Mil.
Total Current Liabilities was $655 Mil.
Long-Term Debt was $236 Mil.
Net Income was 53.5 + 15.7 + 33.2 + 31.9 = $134 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 23.4 + 131.2 + 68.3 + 134.2 = $357 Mil.
|Accounts Receivable was $0 Mil.
Revenue was 1196.6 + 1197.7 + 1142.2 + 1237.5 = $4,774 Mil.
Gross Profit was 693.2 + 600.7 + 657.8 + 662.1 = $2,614 Mil.
Total Current Assets was $1,005 Mil.
Total Assets was $3,019 Mil.
Property, Plant and Equipment(Net PPE) was $905 Mil.
Depreciation, Depletion and Amortization(DDA) was $185 Mil.
Selling, General & Admin. Expense(SGA) was $2,117 Mil.
Total Current Liabilities was $667 Mil.
Long-Term Debt was $188 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)|
|=||(0 / 4788.2)||/||(0 / 4774)|
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)|
|=||(586.7 / 4774)||/||(694.5 / 4788.2)|
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 - (996.7 + 1138) / 3233.3)||/||(1 - (1004.9 + 904.5) / 3018.6)|
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))|
|=||(185 / (185 + 904.5))||/||(197.5 / (197.5 + 1138))|
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)|
|=||(2205 / 4788.2)||/||(2117.3 / 4774)|
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)|
|=||((236 + 655.3) / 3233.3)||/||((188 + 667.2) / 3018.6)|
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|
|=||(134.3 - 0||-||357.1)||/||3233.3|
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 -2.82 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