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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 * 0.9382||+||0.404 * 1.0261||+||0.892 * 1.1841||+||0.115 * 0.775|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0137||+||4.679 * -0.0917||-||0.327 * 0.8508|
|This Year (Jan17) TTM:||Last Year (Jan16) TTM:|
|Accounts Receivable was $0 Mil.|
Revenue was 1748.2 + 1678.4 + 1812.3 + 1669.3 = $6,908 Mil.
Gross Profit was 945.8 + 1014 + 1041.3 + 1016.7 = $4,018 Mil.
Total Current Assets was $1,168 Mil.
Total Assets was $5,359 Mil.
Property, Plant and Equipment(Net PPE) was $1,545 Mil.
Depreciation, Depletion and Amortization(DDA) was $377 Mil.
Selling, General & Admin. Expense(SGA) was $3,433 Mil.
Total Current Liabilities was $960 Mil.
Long-Term Debt was $1,532 Mil.
Net Income was -35.2 + 14.4 + 13.8 + 15 = $8 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 159 + 56 + 282 + 2.2 = $499 Mil.
|Accounts Receivable was $169 Mil.
Revenue was 1841.8 + 1672 + 1169.8 + 1150.3 = $5,834 Mil.
Gross Profit was 968 + 902.7 + 637.6 + 675.1 = $3,183 Mil.
Total Current Assets was $1,237 Mil.
Total Assets was $5,477 Mil.
Property, Plant and Equipment(Net PPE) was $1,605 Mil.
Depreciation, Depletion and Amortization(DDA) was $288 Mil.
Selling, General & Admin. Expense(SGA) was $2,860 Mil.
Total Current Liabilities was $955 Mil.
Long-Term Debt was $2,039 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 / 6908.2)||/||(168.9 / 5833.9)|
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)|
|=||(3183.4 / 5833.9)||/||(4017.8 / 6908.2)|
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 - (1168.4 + 1545.3) / 5359.2)||/||(1 - (1237.4 + 1604.7) / 5477.1)|
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))|
|=||(287.6 / (287.6 + 1604.7))||/||(377 / (377 + 1545.3))|
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)|
|=||(3432.9 / 6908.2)||/||(2859.9 / 5833.9)|
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)|
|=||((1532 + 960) / 5359.2)||/||((2038.7 + 954.6) / 5477.1)|
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|
|=||(8 - 0||-||499.2)||/||5359.2|
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 -3.67 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