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Conn's Inc (NAS:CONN)
Beneish M-Score
-0.89 (As of Today)

Warning Sign:

Beneish M-Score -0.87 higher than -2.22, which implies that it might have manipulated its financial results.

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.

Conn's Inc has a M-score of -0.89 signals that the company is a manipulator.

CONN' s 10-Year Beneish M-Score Range
Min: -3.12   Max: 8.17
Current: -0.89

-3.12
8.17

During the past 13 years, the highest Beneish M-Score of Conn's Inc was 8.17. The lowest was -3.12. And the median was -1.93.


Definition

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 Conn'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 * 0.9803+0.528 * 0.9901+0.404 * 0.9964+0.892 * 1.2441+0.115 * 1.065
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0368+4.679 * 0.3043-0.327 * 1.0896
=-0.89

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jan15) TTM:Last Year (Jan14) TTM:
Accounts Receivable was $643 Mil.
Revenue was 426.748 + 370.058 + 352.964 + 335.448 = $1,485 Mil.
Gross Profit was 162.992 + 189.557 + 182.376 + 173.247 = $708 Mil.
Total Current Assets was $926 Mil.
Total Assets was $1,647 Mil.
Property, Plant and Equipment(Net PPE) was $120 Mil.
Depreciation, Depletion and Amortization(DDA) was $22 Mil.
Selling, General & Admin. Expense(SGA) was $391 Mil.
Total Current Liabilities was $145 Mil.
Long-Term Debt was $774 Mil.
Net Income was 15.458 + -3.064 + 17.65 + 28.469 = $59 Mil.
Non Operating Income was -76.291 + -65.449 + -64.683 + -46.49 = $-253 Mil.
Cash Flow from Operations was -63.107 + -74.118 + -83.354 + 30.678 = $-190 Mil.
Accounts Receivable was $527 Mil.
Revenue was 361.141 + 310.876 + 270.689 + 251.063 = $1,194 Mil.
Gross Profit was 146.41 + 157.603 + 133.331 + 126.2 = $564 Mil.
Total Current Assets was $736 Mil.
Total Assets was $1,298 Mil.
Property, Plant and Equipment(Net PPE) was $87 Mil.
Depreciation, Depletion and Amortization(DDA) was $17 Mil.
Selling, General & Admin. Expense(SGA) was $303 Mil.
Total Current Liabilities was $129 Mil.
Long-Term Debt was $536 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(643.094 / 1485.218) / (527.267 / 1193.769)
=0.43299637 / 0.4416826
=0.9803

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(189.557 / 1193.769) / (162.992 / 1485.218)
=0.47207123 / 0.4768135
=0.9901

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (925.715 + 120.218) / 1647.322) / (1 - (735.595 + 86.842) / 1297.986)
=0.3650707 / 0.36637452
=0.9964

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=1485.218 / 1193.769
=1.2441

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))
=(16.817 / (16.817 + 86.842)) / (21.604 / (21.604 + 120.218))
=0.16223386 / 0.1523318
=1.065

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)
=(391.311 / 1485.218) / (303.351 / 1193.769)
=0.26347041 / 0.25411198
=1.0368

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)
=((774.015 + 145.009) / 1647.322) / ((535.631 + 128.927) / 1297.986)
=0.55788971 / 0.51199165
=1.0896

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(58.513 - -252.913 - -189.901) / 1647.322
=0.3043

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.

Conn's Inc has a M-score of -0.89 signals that the company is likely to be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Conn's Inc Annual Data

Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15
DSRI 1.08740.149311.01766.1410.99071.07350.97511.01060.9803
GMI 0.93471.01511.10340.8960.93380.96780.89170.99030.9901
AQI 1.01621.01983.27973.41190.96731.03420.98570.99620.9964
SGI 1.08491.08341.08080.98120.92540.97961.09181.381.2441
DEPI 0.98731.02410.98480.87980.77380.98021.09841.40631.065
SGAI 1.13491.00640.95721.0181.02221.05150.950.85791.0368
LVGI 0.8920.80851.68961.8240.91090.93890.85681.1261.0896
TATA 0.02730.12080.1326-0.0679-0.0707-0.07290.08370.2340.3112
M-score -2.21-2.548.182.55-2.93-2.77-2.03-1.01-0.86

Conn's Inc Quarterly Data

Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15
DSRI 1.06580.97511.10441.18741.05961.01061.08960.97670.88030.9803
GMI 0.9250.89170.87640.87830.91080.99031.00571.00741.01670.9901
AQI 1.03490.98570.96990.98760.98860.99620.99970.9880.95050.9964
SGI 1.0611.09181.14241.1911.28721.381.39651.39031.31081.2441
DEPI 1.01721.09841.05221.02911.27671.40631.41391.32581.16881.065
SGAI 0.95910.950.95410.98010.99860.85790.88180.90220.91031.0368
LVGI 0.95310.85680.86230.88270.96611.1261.17031.15591.10051.0896
TATA 0.04510.08370.13630.15250.24260.27550.27430.33610.30520.3043
M-score -2.16-2.03-1.64-1.45-1.04-0.82-0.75-0.58-0.89-0.89
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