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Conn's Inc (NAS:CONN)
Beneish M-Score
-1.31 (As of Today)

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 -1.31 signals that the company is a manipulator.

CONN' s Beneish M-Score Range Over the Past 10 Years
Min: -2.13   Max: 9
Current: -1.31

-2.13
9

During the past 13 years, the highest Beneish M-Score of Conn's Inc was 9.00. The lowest was -2.13. And the median was -1.31.


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 * 1.065+0.528 * 0.9861+0.404 * 0.9318+0.892 * 1.0862+0.115 * 1.0224
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0377+4.679 * 0.2454-0.327 * 1.2355
=-1.31

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

This Year (Jan16) TTM:Last Year (Jan15) TTM:
Accounts Receivable was $744 Mil.
Revenue was 456.819 + 395.233 + 396.05 + 365.076 = $1,613 Mil.
Gross Profit was 216.188 + 192.332 + 193.589 + 177.943 = $780 Mil.
Total Current Assets was $1,163 Mil.
Total Assets was $2,025 Mil.
Property, Plant and Equipment(Net PPE) was $151 Mil.
Depreciation, Depletion and Amortization(DDA) was $23 Mil.
Selling, General & Admin. Expense(SGA) was $443 Mil.
Total Current Liabilities was $146 Mil.
Long-Term Debt was $1,249 Mil.
Net Income was 1.061 + -2.421 + 16.538 + 15.677 = $31 Mil.
Non Operating Income was -80.289 + -73.966 + -71.104 + -66.597 = $-292 Mil.
Cash Flow from Operations was -108.828 + -51.848 + -69.797 + 56.351 = $-174 Mil.
Accounts Receivable was $643 Mil.
Revenue was 426.748 + 370.058 + 352.964 + 335.448 = $1,485 Mil.
Gross Profit was 201.535 + 176.341 + 169.212 + 161.084 = $708 Mil.
Total Current Assets was $906 Mil.
Total Assets was $1,646 Mil.
Property, Plant and Equipment(Net PPE) was $120 Mil.
Depreciation, Depletion and Amortization(DDA) was $18 Mil.
Selling, General & Admin. Expense(SGA) was $393 Mil.
Total Current Liabilities was $145 Mil.
Long-Term Debt was $772 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)
=(743.931 / 1613.178) / (643.094 / 1485.218)
=0.46115866 / 0.43299637
=1.065

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)
=(192.332 / 1485.218) / (216.188 / 1613.178)
=0.4768135 / 0.48354986
=0.9861

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 - (1163 + 151.483) / 2025.3) / (1 - (905.675 + 120.218) / 1645.804)
=0.35096875 / 0.3766615
=0.9318

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
=1613.178 / 1485.218
=1.0862

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))
=(18.485 / (18.485 + 120.218)) / (22.706 / (22.706 + 151.483))
=0.13327037 / 0.13035266
=1.0224

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)
=(442.527 / 1613.178) / (392.62 / 1485.218)
=0.27432001 / 0.26435177
=1.0377

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)
=((1248.879 + 146.125) / 2025.3) / ((772.497 + 145.009) / 1645.804)
=0.68878882 / 0.55748194
=1.2355

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
=(30.855 - -291.956 - -174.122) / 2025.3
=0.2454

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 -1.31 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

Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15Jan16
DSRI 1.08930.149311.01766.41490.97041.04920.97511.01060.98031.065
GMI 1.04320.91251.10340.96730.92250.92740.87260.93051.05360.9861
AQI 1.01621.01983.27973.41190.96731.03420.98570.99621.02810.9318
SGI 1.08291.08341.08080.93930.94481.00221.09181.381.24411.0862
DEPI 0.98731.02410.98480.83920.73481.16921.01671.40631.0651.1686
SGAI 0.9961.15580.95721.07170.97391.00970.98640.96620.92061.045
LVGI 0.8920.80851.68961.8240.91090.93890.85681.1261.08881.2355
TATA 0.24260.35920.30220.17120.08680.10410.24940.38960.31150.2454
M-score -1.12-1.518.983.91-2.20-1.93-1.28-0.34-0.79-1.30

Conn's Inc Quarterly Data

Oct13Jan14Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16
DSRI 1.05961.01061.08960.97670.88030.98030.91670.94521.05961.065
GMI 0.9510.93470.97320.99791.03120.99010.97820.96930.95150.9861
AQI 0.98860.99620.99970.9880.95051.02811.03931.00630.94680.9318
SGI 1.28721.381.39651.39031.31081.24411.18521.14521.11521.0862
DEPI 1.27671.69831.68761.55831.55311.0080.97260.96770.82781.0224
SGAI 0.91840.96030.94010.9180.88691.03311.05451.06921.12031.0377
LVGI 0.96611.1261.17031.15591.10051.08881.03031.0571.18061.2355
TATA 0.34650.38290.36090.38490.35070.31150.29950.27090.2210.2454
M-score -0.52-0.33-0.34-0.33-0.63-0.85-1.01-1.18-1.44-1.31
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