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GuruFocus has detected 2 Warning Signs with bebe stores Inc $BEBE.
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bebe stores Inc (NAS:BEBE)
Beneish M-Score
-2.40 (As of Today)

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.

bebe stores Inc has a M-score of -2.40 suggests that the company is not a manipulator.

BEBE' s Beneish M-Score Range Over the Past 10 Years
Min: -4.03   Max: 2.87
Current: -2.4

-4.03
2.87

During the past 13 years, the highest Beneish M-Score of bebe stores Inc was 2.87. The lowest was -4.03. And the median was -2.55.


Definition

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 bebe stores 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 * 1.5861+0.528 * 1.0224+0.404 * 0.3405+0.892 * 0.8758+0.115 * 0.8659
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0788+4.679 * -0.0122-0.327 * 1.0345
=-2.40

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $8.4 Mil.
Revenue was 101.931 + 87.238 + 94.925 + 79.939 = $364.0 Mil.
Gross Profit was 35.028 + 27.495 + 29.328 + 22.971 = $114.8 Mil.
Total Current Assets was $103.6 Mil.
Total Assets was $168.9 Mil.
Property, Plant and Equipment(Net PPE) was $62.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.2 Mil.
Selling, General & Admin. Expense(SGA) was $162.8 Mil.
Total Current Liabilities was $37.0 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -5.231 + -7.778 + 25.086 + -29.968 = $-17.9 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 20.847 + -7.765 + -4.311 + -24.6 = $-15.8 Mil.
Accounts Receivable was $6.1 Mil.
Revenue was 122.447 + 96.283 + 104.259 + 92.668 = $415.7 Mil.
Gross Profit was 41.68 + 27.863 + 36.316 + 28.187 = $134.0 Mil.
Total Current Assets was $97.4 Mil.
Total Assets was $189.6 Mil.
Property, Plant and Equipment(Net PPE) was $83.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $20.2 Mil.
Selling, General & Admin. Expense(SGA) was $172.3 Mil.
Total Current Liabilities was $40.2 Mil.
Long-Term Debt was $0.0 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(8.411 / 364.033) / (6.055 / 415.657)
=0.02310505 / 0.0145673
=1.5861

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(134.046 / 415.657) / (114.822 / 364.033)
=0.32249186 / 0.31541646
=1.0224

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (103.619 + 62.585) / 168.885) / (1 - (97.444 + 83.306) / 189.589)
=0.01587471 / 0.0466219
=0.3405

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=364.033 / 415.657
=0.8758

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))
=(20.194 / (20.194 + 83.306)) / (18.203 / (18.203 + 62.585))
=0.19511111 / 0.22531812
=0.8659

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)
=(162.827 / 364.033) / (172.34 / 415.657)
=0.44728637 / 0.41462071
=1.0788

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)
=((0 + 37.014) / 168.885) / ((0 + 40.167) / 189.589)
=0.21916689 / 0.21186356
=1.0345

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(-17.891 - 0 - -15.829) / 168.885
=-0.0122

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.

bebe stores Inc has a M-score of -2.40 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

bebe stores Inc Annual Data

Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15Jun16
DSRI 1.02081.15470.73611.38860.89541.66990.86110.74391.46951.2981
GMI 1.03141.04571.13740.99821.0390.96831.20621.02460.95791.0958
AQI 1.222510.95560.58290.92830.9380.88870.86620.35050.69590.4697
SGI 1.15861.02490.87690.79591.02781.05390.8910.91781.00680.9196
DEPI 0.97810.99540.82990.87251.04341.28230.87990.99571.06720.7447
SGAI 1.02711.06351.12710.98670.98730.9541.18391.0930.85511.1349
LVGI 0.86691.01471.06362.23140.40961.05681.31231.56230.85980.9685
TATA -0.0382-0.0538-0.0489-0.0774-0.0536-0.0467-0.2003-0.1594-0.01220.0622
M-score -2.361.46-3.22-3.11-2.61-2.07-3.73-3.98-2.17-2.19

bebe stores Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.99570.73971.31781.46950.97551.12151.44351.29811.5481.5861
GMI 1.05971.02891.00250.95790.94511.00411.03111.09581.0521.0224
AQI 0.30030.78340.74410.69590.98211.14820.50790.46970.44230.3405
SGI 0.9180.95621.01941.00681.00990.98110.94290.91960.9110.8758
DEPI 1.07021.12921.19441.06720.95110.79730.68130.74470.75430.8659
SGAI 1.05261.05390.97050.85510.8920.90831.04691.13491.06921.0788
LVGI 1.42521.46261.36580.85981.02341.01181.20510.96850.85451.0345
TATA -0.1468-0.1634-0.1339-0.0122-0.0493-0.0476-0.12510.06220.0548-0.0122
M-score -3.64-3.74-2.99-2.17-2.76-2.56-3.00-2.19-1.99-2.40
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