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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.
Ascena Retail Group Inc has a M-score of -3.74 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Ascena Retail Group Inc was 5.06. The lowest was -3.74. And the median was -2.67.
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 * 1.0115||+||0.404 * 0.9072||+||0.892 * 1.0161||+||0.115 * 1.1847|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0007||+||4.679 * -0.0772||-||0.327 * 0.9383|
|This Year (Jul14) TTM:||Last Year (Jul13) TTM:|
|Accounts Receivable was $0 Mil.|
Revenue was 1182.4 + 1145.1 + 1266.5 + 1196.6 = $4,791 Mil.
Gross Profit was 586.7 + 675 + 688.3 + 710 = $2,660 Mil.
Total Current Assets was $924 Mil.
Total Assets was $3,124 Mil.
Property, Plant and Equipment(Net PPE) was $1,111 Mil.
Depreciation, Depletion and Amortization(DDA) was $194 Mil.
Selling, General & Admin. Expense(SGA) was $2,209 Mil.
Total Current Liabilities was $632 Mil.
Long-Term Debt was $172 Mil.
Net Income was 15.7 + 33.2 + 31.9 + 52.6 = $133 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 131.2 + 68.3 + 134.2 + 41 = $375 Mil.
|Accounts Receivable was $81 Mil.
Revenue was 1197.7 + 1142.2 + 1237.5 + 1137.5 = $4,715 Mil.
Gross Profit was 671.6 + 657.8 + 662.1 + 656.6 = $2,648 Mil.
Total Current Assets was $943 Mil.
Total Assets was $2,872 Mil.
Property, Plant and Equipment(Net PPE) was $825 Mil.
Depreciation, Depletion and Amortization(DDA) was $176 Mil.
Selling, General & Admin. Expense(SGA) was $2,172 Mil.
Total Current Liabilities was $653 Mil.
Long-Term Debt was $135 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 / 4790.6)||/||(80.9 / 4714.9)|
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)|
|=||(675 / 4714.9)||/||(586.7 / 4790.6)|
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 - (923.6 + 1110.6) / 3123.8)||/||(1 - (942.8 + 824.8) / 2871.7)|
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))|
|=||(176 / (176 + 824.8))||/||(193.6 / (193.6 + 1110.6))|
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)|
|=||(2208.6 / 4790.6)||/||(2172.2 / 4714.9)|
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)|
|=||((172 + 631.9) / 3123.8)||/||((135 + 652.6) / 2871.7)|
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|
|=||(133.4 - 0||-||374.7)||/||3123.8|
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 -3.74 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