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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 -1.99 signals that the company is a manipulator.
During the past 5 years, the highest Beneish M-Score of Annie's Inc was -1.87. The lowest was -2.56. And the median was -2.15.
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 * 1.0753||+||0.528 * 1.0827||+||0.404 * 0.8082||+||0.892 * 1.1925||+||0.115 * 1.4057|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9426||+||4.679 * 0.0568||-||0.327 * 1.1278|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $19.8 Mil.|
Revenue was 43.297 + 60.237 + 46.177 + 58.65 = $208.4 Mil.
Gross Profit was 12.228 + 20.74 + 18.226 + 21.901 = $73.1 Mil.
Total Current Assets was $57.9 Mil.
Total Assets was $108.6 Mil.
Property, Plant and Equipment(Net PPE) was $13.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.7 Mil.
Selling, General & Admin. Expense(SGA) was $52.4 Mil.
Total Current Liabilities was $19.9 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -1.22 + 4.919 + 2.789 + 5.552 = $12.0 Mil.
Non Operating Income was 0.015 + -0.047 + 0.03 + 0.032 = $0.0 Mil.
Cash Flow from Operations was -8.26 + 13.496 + -8.973 + 9.581 = $5.8 Mil.
|Accounts Receivable was $15.4 Mil.
Revenue was 39.04 + 52.715 + 36.283 + 46.686 = $174.7 Mil.
Gross Profit was 14.762 + 20.688 + 13.016 + 17.9 = $66.4 Mil.
Total Current Assets was $41.7 Mil.
Total Assets was $83.6 Mil.
Property, Plant and Equipment(Net PPE) was $6.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.2 Mil.
Selling, General & Admin. Expense(SGA) was $46.6 Mil.
Total Current Liabilities was $13.5 Mil.
Long-Term Debt was $0.0 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)|
|=||(19.76 / 208.361)||/||(15.409 / 174.724)|
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)|
|=||(20.74 / 174.724)||/||(12.228 / 208.361)|
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 - (57.861 + 13.215) / 108.621)||/||(1 - (41.692 + 6.142) / 83.579)|
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))|
|=||(1.174 / (1.174 + 6.142))||/||(1.703 / (1.703 + 13.215))|
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)|
|=||(52.358 / 208.361)||/||(46.577 / 174.724)|
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 + 19.867) / 108.621)||/||((0.007 + 13.547) / 83.579)|
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|
|=||(12.04 - 0.03||-||5.844)||/||108.621|
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 -1.99 signals that the company is likely to 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