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Conn's Inc (NAS:CONN)
Beneish M-Score
-0.91 (As of Today)

Warning Sign:

Beneish M-Score -0.91 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 -0.91 signals that the company is a manipulator.

CONN' s 10-Year Beneish M-Score Range
Min: -4.69   Max: 4.01
Current: -0.91

-4.69
4.01

During the past 13 years, the highest Beneish M-Score of Conn's Inc was 4.01. The lowest was -4.69. And the median was -2.19.


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 * 0.9638+0.528 * 0.9495+0.404 * 0.9997+0.892 * 1.3965+0.115 * 1.4139
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9835+4.679 * 0.2743-0.327 * 1.1703
=-0.91

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

This Year (Apr14) TTM:Last Year (Apr13) TTM:
Accounts Receivable was $601 Mil.
Revenue was 335.448 + 361.141 + 310.876 + 270.689 = $1,278 Mil.
Gross Profit was 173.247 + 182.587 + 157.603 + 133.331 = $647 Mil.
Total Current Assets was $775 Mil.
Total Assets was $1,360 Mil.
Property, Plant and Equipment(Net PPE) was $96 Mil.
Depreciation, Depletion and Amortization(DDA) was $18 Mil.
Selling, General & Admin. Expense(SGA) was $370 Mil.
Total Current Liabilities was $192 Mil.
Long-Term Debt was $517 Mil.
Net Income was 28.469 + 27.735 + 24.376 + 19.162 = $100 Mil.
Non Operating Income was -46.49 + -0.048 + -53.83 + 0.032 = $-100 Mil.
Cash Flow from Operations was 30.678 + -100.563 + -70.511 + -32.675 = $-173 Mil.
Accounts Receivable was $447 Mil.
Revenue was 251.063 + 250.344 + 206.401 + 207.436 = $915 Mil.
Gross Profit was 126.2 + 119.251 + 99.191 + 95.085 = $440 Mil.
Total Current Assets was $561 Mil.
Total Assets was $957 Mil.
Property, Plant and Equipment(Net PPE) was $52 Mil.
Depreciation, Depletion and Amortization(DDA) was $15 Mil.
Selling, General & Admin. Expense(SGA) was $270 Mil.
Total Current Liabilities was $132 Mil.
Long-Term Debt was $294 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)
=(601.161 / 1278.154) / (446.65 / 915.244)
=0.47033534 / 0.48801194
=0.9638

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)
=(182.587 / 915.244) / (173.247 / 1278.154)
=0.48044784 / 0.50601727
=0.9495

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 - (774.956 + 96.335) / 1360.383) / (1 - (561.27 + 51.731) / 957.274)
=0.35952522 / 0.35963893
=0.9997

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
=1278.154 / 915.244
=1.3965

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))
=(14.714 / (14.714 + 51.731)) / (17.89 / (17.89 + 96.335))
=0.22144631 / 0.1566207
=1.4139

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)
=(370.348 / 1278.154) / (269.65 / 915.244)
=0.28975225 / 0.29462089
=0.9835

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)
=((517.358 + 191.594) / 1360.383) / ((293.773 + 132.499) / 957.274)
=0.52114147 / 0.44529779
=1.1703

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
=(99.742 - -100.336 - -173.071) / 1360.383
=0.2743

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 -0.91 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

Jan05Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14
DSRI 0.72721.23361.05952.40921.76752.55930.95271.07720.9895
GMI 1.03141.04320.91251.10340.96730.90940.94070.87260.9305
AQI 0.85060.90570.78094.28331.36252.43781.02760.98570.9962
SGI 1.23861.08291.08341.08080.93930.94481.00221.09181.38
DEPI 0.93480.98730.97191.03010.84530.73481.08221.09841.4063
SGAI 0.94410.98311.1560.96591.05390.99170.99160.98640.9662
LVGI 1.13440.89340.80851.74441.03621.57210.92750.85681.1492
TATA -0.06650.02790.11590.13260.0716-0.0751-0.07290.08370.234
M-score -2.91-2.04-1.910.66-1.40-1.13-2.85-1.95-1.09

Conn's Inc Quarterly Data

Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14
DSRI 0.95410.96330.96421.00511.07571.12391.06761.06610.98950.9638
GMI 0.94270.91940.90050.83640.87070.86870.88360.92450.93050.9495
AQI 1.02761.03771.021.03490.98570.96990.98760.98860.99620.9997
SGI 1.00081.02611.09661.11791.09341.14021.1851.27021.381.3965
DEPI 1.08221.19631.44721.29861.09841.05221.02911.20311.40631.4139
SGAI 0.98540.99390.97310.95040.98430.97980.9951.01970.96690.9835
LVGI 0.92750.95820.98860.95310.85680.86230.88270.96611.14921.1703
TATA -0.0739-0.04620.02110.04580.08370.13630.1520.24210.27550.2743
M-score -2.85-2.70-2.31-2.17-1.95-1.63-1.57-1.06-0.90-0.91
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