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GuruFocus has detected 2 Warning Signs with Barnes & Noble Inc $BKS.
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Barnes & Noble Inc (NYSE:BKS)
Beneish M-Score
-2.66 (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.

Barnes & Noble Inc has a M-score of -2.66 suggests that the company is not a manipulator.

BKS' s Beneish M-Score Range Over the Past 10 Years
Min: -3.43   Max: -0.46
Current: -2.66

-3.43
-0.46

During the past 13 years, the highest Beneish M-Score of Barnes & Noble Inc was -0.46. The lowest was -3.43. And the median was -2.73.


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 Barnes & Noble 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 * 1.079+0.528 * 1.037+0.404 * 1.1102+0.892 * 0.9411+0.115 * 1.0323
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9962+4.679 * -0.0529-0.327 * 1.0573
=-2.66

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

This Year (Jan17) TTM:Last Year (Jan16) TTM:
Accounts Receivable was $70 Mil.
Revenue was 1300.908 + 858.548 + 913.882 + 876.684 = $3,950 Mil.
Gross Profit was 436.801 + 255.375 + 277.539 + 265.758 = $1,235 Mil.
Total Current Assets was $1,155 Mil.
Total Assets was $1,969 Mil.
Property, Plant and Equipment(Net PPE) was $281 Mil.
Depreciation, Depletion and Amortization(DDA) was $124 Mil.
Selling, General & Admin. Expense(SGA) was $1,093 Mil.
Total Current Liabilities was $1,205 Mil.
Long-Term Debt was $18 Mil.
Net Income was 70.276 + -20.409 + -14.416 + -30.608 = $5 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 210.173 + -79.373 + 27.623 + -49.463 = $109 Mil.
Accounts Receivable was $69 Mil.
Revenue was 1413.947 + 894.654 + 978.559 + 910.079 = $4,197 Mil.
Gross Profit was 491.655 + 269.786 + 300.098 + 299.807 = $1,361 Mil.
Total Current Assets was $1,361 Mil.
Total Assets was $2,206 Mil.
Property, Plant and Equipment(Net PPE) was $307 Mil.
Depreciation, Depletion and Amortization(DDA) was $142 Mil.
Selling, General & Admin. Expense(SGA) was $1,166 Mil.
Total Current Liabilities was $1,296 Mil.
Long-Term Debt was $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)
=(70.434 / 3950.022) / (69.364 / 4197.239)
=0.01783129 / 0.0165261
=1.079

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)
=(1361.346 / 4197.239) / (1235.473 / 3950.022)
=0.32434322 / 0.31277623
=1.037

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 - (1154.569 + 281.467) / 1968.956) / (1 - (1361.341 + 307.179) / 2206.42)
=0.2706612 / 0.24378858
=1.1102

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
=3950.022 / 4197.239
=0.9411

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))
=(141.743 / (141.743 + 307.179)) / (124.026 / (124.026 + 281.467))
=0.31574082 / 0.30586471
=1.0323

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)
=(1093.214 / 3950.022) / (1166.049 / 4197.239)
=0.2767615 / 0.27781334
=0.9962

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)
=((18.2 + 1204.726) / 1968.956) / ((0 + 1296.187) / 2206.42)
=0.62110377 / 0.58746159
=1.0573

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
=(4.843 - 0 - 108.96) / 1968.956
=-0.0529

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.

Barnes & Noble Inc has a M-score of -2.66 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.

Barnes & Noble Inc Annual Data

Jan07Jan08Jan09Apr10Apr11Apr12Apr13Apr14Apr15Apr16
DSRI 0.98311.08590.76270.50871.44891.10080.79341.15270.34621.2415
GMI 0.98631.02680.98231.06931.12170.95691.09330.80330.92291.041
AQI 0.92690.96521.06272.10871.00460.95280.97221.02241.23480.7152
SGI 1.0311.02840.94661.13391.2051.01870.95930.67750.92740.969
DEPI 1.01391.00970.98970.83770.81050.93210.97211.08350.86430.9558
SGAI 1.03121.00911.05970.97350.96881.04791.0041.1340.99861.0188
LVGI 0.97741.05011.00731.08671.06311.05660.79821.01350.97241.3029
TATA -0.0378-0.0919-0.1027-0.0254-0.0745-0.0108-0.0737-0.09130.012-0.1094
M-score -2.68-2.82-3.22-2.49-2.20-2.50-2.95-3.17-3.04-3.00

Barnes & Noble Inc Quarterly Data

Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17
DSRI 0.69420.4910.32890.88340.95390.71871.30681.0660.9561.079
GMI 0.73220.7220.93980.96781.03141.12181.02231.02491.02551.037
AQI 1.13911.15041.23481.01270.73010.81510.71520.90761.06651.1102
SGI 0.57010.5030.97620.93941.12851.3170.92060.9610.9620.9411
DEPI 1.04231.15240.86431.12980.90590.81730.95580.7270.98621.0323
SGAI 1.27751.39091.01191.00320.89220.81691.00541.02490.99910.9962
LVGI 0.92390.95140.97241.00131.22881.11941.30291.21821.07421.0573
TATA -0.00240.01760.012-0.0453-0.0357-0.0602-0.1094-0.0829-0.0765-0.0529
M-score -3.26-3.43-3.01-2.85-2.73-2.78-2.99-2.97-2.90-2.66
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