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Conn's Inc (NAS:CONN)
Beneish M-Score
-0.62 (As of Today)

Warning Sign:

Beneish M-Score -0.62 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 -0.62 signals that the company is a manipulator.

CONN' s 10-Year Beneish M-Score Range
Min: -3.98   Max: 3.24
Current: -0.62

-3.98
3.24

During the past 13 years, the highest Beneish M-Score of Conn's Inc was 3.24. The lowest was -3.98. And the median was -2.31.


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 * 0.9767+0.528 * 0.9551+0.404 * 0.988+0.892 * 1.3903+0.115 * 1.3258
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9976+4.679 * 0.3361-0.327 * 1.1559
=-0.62

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

This Year (Jul14) TTM:Last Year (Jul13) TTM:
Accounts Receivable was $634 Mil.
Revenue was 352.964 + 335.448 + 361.141 + 310.876 = $1,360 Mil.
Gross Profit was 182.376 + 173.247 + 182.587 + 157.603 = $696 Mil.
Total Current Assets was $817 Mil.
Total Assets was $1,449 Mil.
Property, Plant and Equipment(Net PPE) was $112 Mil.
Depreciation, Depletion and Amortization(DDA) was $20 Mil.
Selling, General & Admin. Expense(SGA) was $400 Mil.
Total Current Liabilities was $159 Mil.
Long-Term Debt was $607 Mil.
Net Income was 17.65 + 28.469 + 27.735 + 24.376 = $98 Mil.
Non Operating Income was -64.683 + -46.49 + -0.048 + -53.83 = $-165 Mil.
Cash Flow from Operations was -83.354 + 30.678 + -100.563 + -70.511 = $-224 Mil.
Accounts Receivable was $467 Mil.
Revenue was 270.689 + 251.063 + 250.344 + 206.401 = $978 Mil.
Gross Profit was 133.331 + 126.2 + 119.251 + 99.191 = $478 Mil.
Total Current Assets was $591 Mil.
Total Assets was $1,023 Mil.
Property, Plant and Equipment(Net PPE) was $61 Mil.
Depreciation, Depletion and Amortization(DDA) was $15 Mil.
Selling, General & Admin. Expense(SGA) was $289 Mil.
Total Current Liabilities was $133 Mil.
Long-Term Debt was $334 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)
=(633.68 / 1360.429) / (466.656 / 978.497)
=0.46579425 / 0.47691102
=0.9767

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)
=(173.247 / 978.497) / (182.376 / 1360.429)
=0.48847671 / 0.51146587
=0.9551

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 - (816.954 + 112.149) / 1449.195) / (1 - (591.027 + 60.685) / 1023.46)
=0.35888338 / 0.3632267
=0.988

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
=1360.429 / 978.497
=1.3903

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))
=(14.878 / (14.878 + 60.685)) / (19.56 / (19.56 + 112.149))
=0.19689531 / 0.14850921
=1.3258

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)
=(400.386 / 1360.429) / (288.68 / 978.497)
=0.29430863 / 0.2950239
=0.9976

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)
=((606.98 + 158.584) / 1449.195) / ((334.298 + 133.43) / 1023.46)
=0.52826845 / 0.45700662
=1.1559

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
=(98.23 - -165.051 - -223.75) / 1449.195
=0.3361

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 -0.62 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 0.81231.07741.05952.40924.33361.02030.97471.07720.9895
GMI 0.93451.14690.91251.10340.8960.93380.96780.89170.9305
AQI 0.76041.01620.78094.28333.41190.97351.02760.98570.9962
SGI 1.23921.08491.08341.08080.98120.92540.97961.09181.38
DEPI 0.91280.98011.00261.03760.87980.70091.08221.09841.4063
SGAI 1.08240.86891.1560.94991.0181.03211.04140.950.9662
LVGI 1.1260.8920.80851.68961.8240.9220.92750.85681.1492
TATA -0.06520.02730.11590.1326-0.0679-0.0701-0.07290.08370.234
M-score -2.94-2.07-1.910.680.89-2.92-2.84-1.93-1.09

Conn's Inc Quarterly Data

Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14
DSRI 0.99060.99991.0591.07721.12171.06221.0520.98950.96380.9767
GMI 0.97290.98440.9250.89170.87640.87830.91080.93050.94950.9551
AQI 1.03771.021.03490.98570.96990.98760.98860.99620.99970.988
SGI 0.99771.05751.0611.09181.14241.1911.28721.381.39651.3903
DEPI 1.17591.41861.15781.09841.05221.02911.27671.40631.41391.3258
SGAI 1.01950.96590.95010.950.95410.98010.99860.96620.98350.9976
LVGI 0.95820.98860.95310.85680.86230.88270.96611.14921.17031.1559
TATA -0.04580.02050.04510.08370.13630.15250.24260.27550.27430.3361
M-score -2.67-2.28-2.14-1.93-1.62-1.56-1.05-0.90-0.91-0.62
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