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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 5.13. The lowest was -3.89. And the median was -2.73.
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||+||0.528 * 0.9467||+||0.404 * 1.0488||+||0.892 * 1.3259||+||0.115 * 0.7155|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0113||+||4.679 * -0.0962||-||0.327 * 0.849|
* 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 $0 Mil.|
Revenue was 1678.4 + 1812.3 + 1669.3 + 1841.8 = $7,002 Mil.
Gross Profit was 1014 + 1041.3 + 1016.7 + 958.1 = $4,030 Mil.
Total Current Assets was $1,251 Mil.
Total Assets was $5,489 Mil.
Property, Plant and Equipment(Net PPE) was $1,609 Mil.
Depreciation, Depletion and Amortization(DDA) was $370 Mil.
Selling, General & Admin. Expense(SGA) was $3,444 Mil.
Total Current Liabilities was $992 Mil.
Long-Term Debt was $1,601 Mil.
Net Income was 14.4 + 13.8 + 15 + -22.6 = $21 Mil.
Non Operating Income was 0 + 0 + 0 + 0.8 = $1 Mil.
Cash Flow from Operations was 56 + 282 + 2.2 + 207.6 = $548 Mil.
|Accounts Receivable was $134 Mil.
Revenue was 1672 + 1169.8 + 1150.3 + 1288.6 = $5,281 Mil.
Gross Profit was 902.7 + 637.6 + 675.1 + 662 = $2,877 Mil.
Total Current Assets was $1,534 Mil.
Total Assets was $5,806 Mil.
Property, Plant and Equipment(Net PPE) was $1,619 Mil.
Depreciation, Depletion and Amortization(DDA) was $250 Mil.
Selling, General & Admin. Expense(SGA) was $2,569 Mil.
Total Current Liabilities was $1,020 Mil.
Long-Term Debt was $2,211 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 / 7001.8)||/||(133.8 / 5280.7)|
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)|
|=||(2877.4 / 5280.7)||/||(4030.1 / 7001.8)|
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 - (1250.6 + 1608.5) / 5488.9)||/||(1 - (1534.1 + 1619.3) / 5805.5)|
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))|
|=||(250.2 / (250.2 + 1619.3))||/||(370.1 / (370.1 + 1608.5))|
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)|
|=||(3444.2 / 7001.8)||/||(2568.6 / 5280.7)|
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)|
|=||((1601 + 992.4) / 5488.9)||/||((2211.1 + 1019.6) / 5805.5)|
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|
|=||(20.6 - 0.8||-||547.8)||/||5488.9|
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 -3.55 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