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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 * 1||+||0.528 * 1.0073||+||0.404 * 1.405||+||0.892 * 1.3193||+||0.115 * 0.9482|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0362||+||4.679 * -0.1206||-||0.327 * 2.1925|
|This Year (Apr16) TTM:||Last Year (Apr15) TTM:|
|Accounts Receivable was $132 Mil.|
Revenue was 1669.3 + 1841.8 + 1672 + 1169.8 = $6,353 Mil.
Gross Profit was 1016.7 + 958.1 + 896.1 + 637.6 = $3,509 Mil.
Total Current Assets was $1,240 Mil.
Total Assets was $5,485 Mil.
Property, Plant and Equipment(Net PPE) was $1,616 Mil.
Depreciation, Depletion and Amortization(DDA) was $321 Mil.
Selling, General & Admin. Expense(SGA) was $3,125 Mil.
Total Current Liabilities was $930 Mil.
Long-Term Debt was $2,064 Mil.
Net Income was 15 + -22.6 + -18.1 + -323.4 = $-349 Mil.
Non Operating Income was 0 + 0.8 + 0 + 0 = $1 Mil.
Cash Flow from Operations was 2.2 + 207.6 + -46.4 + 148 = $311 Mil.
|Accounts Receivable was $0 Mil.
Revenue was 1150.3 + 1288.6 + 1194.2 + 1182.4 = $4,816 Mil.
Gross Profit was 675.1 + 662 + 694.5 + 647.2 = $2,679 Mil.
Total Current Assets was $983 Mil.
Total Assets was $3,220 Mil.
Property, Plant and Equipment(Net PPE) was $1,139 Mil.
Depreciation, Depletion and Amortization(DDA) was $212 Mil.
Selling, General & Admin. Expense(SGA) was $2,286 Mil.
Total Current Liabilities was $647 Mil.
Long-Term Debt was $155 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)|
|=||(132.1 / 6352.9)||/||(0 / 4815.5)|
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)|
|=||(2678.8 / 4815.5)||/||(3508.5 / 6352.9)|
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 - (1239.8 + 1615.9) / 5485.2)||/||(1 - (983.1 + 1138.5) / 3220.4)|
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))|
|=||(212 / (212 + 1138.5))||/||(320.6 / (320.6 + 1615.9))|
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)|
|=||(3125.2 / 6352.9)||/||(2286.2 / 4815.5)|
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)|
|=||((2063.9 + 930) / 5485.2)||/||((155 + 646.7) / 3220.4)|
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|
|=||(-349.1 - 0.8||-||311.4)||/||5485.2|
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 -2.99 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