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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 -1.87 signals that the company is a manipulator.
During the past 4 years, the highest Beneish M-Score of Annie's Inc was -1.87. The lowest was -2.31. And the median was -2.09.
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 * 1.1935||+||0.528 * 1.0042||+||0.404 * 0.9614||+||0.892 * 1.2268||+||0.115 * 0.8699|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9169||+||4.679 * 0.0652||-||0.327 * 1.1866|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $19.8 Mil.|
Revenue was 46.177 + 58.65 + 39.04 + 52.715 = $196.6 Mil.
Gross Profit was 18.226 + 21.901 + 14.762 + 20.688 = $75.6 Mil.
Total Current Assets was $54.3 Mil.
Total Assets was $96.4 Mil.
Property, Plant and Equipment(Net PPE) was $6.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.4 Mil.
Selling, General & Admin. Expense(SGA) was $50.3 Mil.
Total Current Liabilities was $15.9 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 2.789 + 5.552 + 2.029 + 4.234 = $14.6 Mil.
Non Operating Income was 0.03 + 0.032 + 0.026 + -0.029 = $0.1 Mil.
Cash Flow from Operations was -8.973 + 9.581 + 3.142 + 4.513 = $8.3 Mil.
|Accounts Receivable was $13.5 Mil.
Revenue was 36.283 + 46.686 + 34.293 + 42.984 = $160.2 Mil.
Gross Profit was 13.016 + 17.9 + 13.807 + 17.141 = $61.9 Mil.
Total Current Assets was $51.8 Mil.
Total Assets was $93.5 Mil.
Property, Plant and Equipment(Net PPE) was $5.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.0 Mil.
Selling, General & Admin. Expense(SGA) was $44.7 Mil.
Total Current Liabilities was $13.0 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)|
|=||(19.784 / 196.582)||/||(13.512 / 160.246)|
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)|
|=||(21.901 / 160.246)||/||(18.226 / 196.582)|
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 - (54.314 + 6.206) / 96.395)||/||(1 - (51.795 + 5.517) / 93.512)|
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))|
|=||(1.016 / (1.016 + 5.517))||/||(1.351 / (1.351 + 6.206))|
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)|
|=||(50.31 / 196.582)||/||(44.726 / 160.246)|
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 + 15.888) / 96.395)||/||((0 + 12.989) / 93.512)|
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|
|=||(14.604 - 0.059||-||8.263)||/||96.395|
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 -1.87 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