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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.
Annie's Inc has a M-score of -2.52 suggests that the company is not a manipulator.
During the past 5 years, the highest Beneish M-Score of Annie's Inc was -2.52. The lowest was -2.52. And the median was -2.52.
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 Annie's 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 * 0.7865||+||0.528 * 1.0336||+||0.404 * 0.8524||+||0.892 * 1.2044||+||0.115 * 0.8155|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9043||+||4.679 * -0.0193||-||0.327 * 0.6541|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $18.3 Mil.|
Revenue was 60.237 + 46.177 + 58.65 + 39.04 = $204.1 Mil.
Gross Profit was 20.74 + 18.226 + 21.901 + 14.762 = $75.6 Mil.
Total Current Assets was $61.7 Mil.
Total Assets was $103.6 Mil.
Property, Plant and Equipment(Net PPE) was $6.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.5 Mil.
Selling, General & Admin. Expense(SGA) was $49.5 Mil.
Total Current Liabilities was $17.8 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 4.919 + 2.789 + 5.552 + 2.029 = $15.3 Mil.
Non Operating Income was -0.047 + 0.03 + 0.032 + 0.026 = $0.0 Mil.
Cash Flow from Operations was 13.496 + -8.973 + 9.581 + 3.142 = $17.2 Mil.
|Accounts Receivable was $19.3 Mil.
Revenue was 52.21 + 36.283 + 46.686 + 34.293 = $169.5 Mil.
Gross Profit was 20.183 + 13.016 + 17.9 + 13.807 = $64.9 Mil.
Total Current Assets was $47.6 Mil.
Total Assets was $89.5 Mil.
Property, Plant and Equipment(Net PPE) was $6.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.1 Mil.
Selling, General & Admin. Expense(SGA) was $45.5 Mil.
Total Current Liabilities was $16.5 Mil.
Long-Term Debt was $7.0 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)|
|=||(18.324 / 204.104)||/||(19.344 / 169.472)|
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)|
|=||(18.226 / 169.472)||/||(20.74 / 204.104)|
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 - (61.71 + 6.62) / 103.641)||/||(1 - (47.611 + 6.138) / 89.535)|
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))|
|=||(1.065 / (1.065 + 6.138))||/||(1.466 / (1.466 + 6.62))|
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)|
|=||(49.509 / 204.104)||/||(45.461 / 169.472)|
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 + 17.824) / 103.641)||/||((7.007 + 16.533) / 89.535)|
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|
|=||(15.289 - 0.041||-||17.246)||/||103.641|
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.
Annie's Inc has a M-score of -2.52 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
Annie's Inc Annual Data
Annie's Inc Quarterly Data