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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.
Barnes & Noble, Inc. has a M-score of -3.26 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Barnes & Noble, Inc. was -0.46. The lowest was -3.38. And the median was -2.69.
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 * 0.8206||+||0.528 * 1.0184||+||0.404 * 0.9981||+||0.892 * 0.9128||+||0.115 * 0.9797|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9812||+||4.679 * -0.1169||-||0.327 * 1.0028|
|This Year (Jan14) TTM:||Last Year (Jan13) TTM:|
|Accounts Receivable was $297 Mil.|
Revenue was 1995.79 + 1734.159 + 1329.502 + 1277.021 = $6,336 Mil.
Gross Profit was 603.441 + 461.942 + 368.201 + 230.9 = $1,664 Mil.
Total Current Assets was $2,534 Mil.
Total Assets was $4,141 Mil.
Property, Plant and Equipment(Net PPE) was $530 Mil.
Depreciation, Depletion and Amortization(DDA) was $224 Mil.
Selling, General & Admin. Expense(SGA) was $1,549 Mil.
Total Current Liabilities was $2,284 Mil.
Long-Term Debt was $0 Mil.
Net Income was 63.23 + 13.229 + -87.022 + -114.796 = $-125 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 303.832 + 142.945 + 2.839 + -90.949 = $359 Mil.
|Accounts Receivable was $396 Mil.
Revenue was 2223.945 + 1884.532 + 1453.507 + 1379.71 = $6,942 Mil.
Gross Profit was 553.512 + 482.289 + 415.805 + 405.478 = $1,857 Mil.
Total Current Assets was $2,636 Mil.
Total Assets was $4,340 Mil.
Property, Plant and Equipment(Net PPE) was $573 Mil.
Depreciation, Depletion and Amortization(DDA) was $236 Mil.
Selling, General & Admin. Expense(SGA) was $1,730 Mil.
Total Current Liabilities was $2,260 Mil.
Long-Term Debt was $127 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)|
|=||(296.759 / 6336.472)||/||(396.169 / 6941.694)|
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)|
|=||(461.942 / 6941.694)||/||(603.441 / 6336.472)|
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 - (2534.256 + 530.273) / 4141.177)||/||(1 - (2636.408 + 573.369) / 4340.294)|
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))|
|=||(235.757 / (235.757 + 573.369))||/||(224.462 / (224.462 + 530.273))|
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)|
|=||(1549.268 / 6336.472)||/||(1729.728 / 6941.694)|
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 + 2284.174) / 4141.177)||/||((127.25 + 2260.178) / 4340.294)|
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|
|=||(-125.359 - 0||-||358.667)||/||4141.177|
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 -3.26 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