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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 Barnes & Noble Inc was -0.46. The lowest was -3.43. 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 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|
* 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
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)|
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)|
|=||(1361.346 / 4197.239)||/||(1235.473 / 3950.022)|
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 - (1154.569 + 281.467) / 1968.956)||/||(1 - (1361.341 + 307.179) / 2206.42)|
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))|
|=||(141.743 / (141.743 + 307.179))||/||(124.026 / (124.026 + 281.467))|
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)|
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)|
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|
|=||(4.843 - 0||-||108.96)||/||1968.956|
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.
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
Barnes & Noble Inc Annual Data
Barnes & Noble Inc Quarterly Data