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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 Bon-Ton Stores Inc was 71.67. The lowest was -4.15. And the median was -2.70.
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 Bon-Ton Stores 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 * 1.0161||+||0.528 * 1.0169||+||0.404 * 0.8359||+||0.892 * 0.978||+||0.115 * 0.9349|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0192||+||4.679 * -0.0869||-||0.327 * 1.0253|
|This Year (Jul16) TTM:||Last Year (Jul15) TTM:|
|Accounts Receivable was $36 Mil.|
Revenue was 558.612 + 608.423 + 950.359 + 640.897 = $2,758 Mil.
Gross Profit was 214.339 + 217.51 + 344.962 + 225.872 = $1,003 Mil.
Total Current Assets was $776 Mil.
Total Assets was $1,485 Mil.
Property, Plant and Equipment(Net PPE) was $614 Mil.
Depreciation, Depletion and Amortization(DDA) was $94 Mil.
Selling, General & Admin. Expense(SGA) was $900 Mil.
Total Current Liabilities was $448 Mil.
Long-Term Debt was $886 Mil.
Net Income was -38.736 + -37.818 + 50.576 + -33.992 = $-60 Mil.
Non Operating Income was 0 + 0 + -1.346 + 0 = $-1 Mil.
Cash Flow from Operations was 51.291 + 12.278 + 158.561 + -151.703 = $70 Mil.
|Accounts Receivable was $37 Mil.
Revenue was 570.999 + 627.242 + 963.469 + 658.757 = $2,820 Mil.
Gross Profit was 220.171 + 222.777 + 350.362 + 249.273 = $1,043 Mil.
Total Current Assets was $839 Mil.
Total Assets was $1,604 Mil.
Property, Plant and Equipment(Net PPE) was $642 Mil.
Depreciation, Depletion and Amortization(DDA) was $91 Mil.
Selling, General & Admin. Expense(SGA) was $903 Mil.
Total Current Liabilities was $536 Mil.
Long-Term Debt was $869 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)|
|=||(36.475 / 2758.291)||/||(36.705 / 2820.467)|
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)|
|=||(1042.583 / 2820.467)||/||(1002.683 / 2758.291)|
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 - (775.754 + 613.763) / 1484.746)||/||(1 - (838.95 + 641.748) / 1603.752)|
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))|
|=||(90.739 / (90.739 + 641.748))||/||(93.75 / (93.75 + 613.763))|
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)|
|=||(899.837 / 2758.291)||/||(902.782 / 2820.467)|
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)|
|=||((886.122 + 447.543) / 1484.746)||/||((868.855 + 536.188) / 1603.752)|
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|
|=||(-59.97 - -1.346||-||70.427)||/||1484.746|
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.
Bon-Ton Stores Inc has a M-score of -2.97 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
Bon-Ton Stores Inc Annual Data
Bon-Ton Stores Inc Quarterly Data