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Conn's Inc (NAS:CONN)
Beneish M-Score
-0.94 (As of Today)

Warning Sign:

Beneish M-Score -0.94 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 -0.94 signals that the company is a manipulator.

CONN' s 10-Year Beneish M-Score Range
Min: -3.98   Max: 8.17
Current: -0.94

-3.98
8.17

During the past 12 years, the highest Beneish M-Score of Conn's Inc was 8.17. The lowest was -3.98. And the median was -2.29.


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 * 0.8803+0.528 * 0.9661+0.404 * 0.9505+0.892 * 1.3108+0.115 * 1.1688
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0016+4.679 * 0.3052-0.327 * 1.1005
=-0.94

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

This Year (Oct14) TTM:Last Year (Oct13) TTM:
Accounts Receivable was $598 Mil.
Revenue was 370.058 + 352.964 + 335.448 + 361.141 = $1,420 Mil.
Gross Profit was 189.557 + 182.376 + 173.247 + 182.587 = $728 Mil.
Total Current Assets was $911 Mil.
Total Assets was $1,556 Mil.
Property, Plant and Equipment(Net PPE) was $117 Mil.
Depreciation, Depletion and Amortization(DDA) was $20 Mil.
Selling, General & Admin. Expense(SGA) was $420 Mil.
Total Current Liabilities was $163 Mil.
Long-Term Debt was $696 Mil.
Net Income was -3.064 + 17.65 + 28.469 + 27.735 = $71 Mil.
Non Operating Income was -65.449 + -64.683 + -46.49 + -0.048 = $-177 Mil.
Cash Flow from Operations was -74.118 + -83.354 + 30.678 + -100.563 = $-227 Mil.
Accounts Receivable was $518 Mil.
Revenue was 310.876 + 270.689 + 251.063 + 250.344 = $1,083 Mil.
Gross Profit was 157.603 + 133.331 + 126.2 + 119.251 = $536 Mil.
Total Current Assets was $679 Mil.
Total Assets was $1,174 Mil.
Property, Plant and Equipment(Net PPE) was $75 Mil.
Depreciation, Depletion and Amortization(DDA) was $16 Mil.
Selling, General & Admin. Expense(SGA) was $320 Mil.
Total Current Liabilities was $167 Mil.
Long-Term Debt was $422 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)
=(598.241 / 1419.611) / (518.443 / 1082.972)
=0.42141192 / 0.47872244
=0.8803

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)
=(182.376 / 1082.972) / (189.557 / 1419.611)
=0.49528981 / 0.51265241
=0.9661

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 - (910.646 + 116.585) / 1556.006) / (1 - (679.042 + 75.435) / 1174.364)
=0.33982838 / 0.35754417
=0.9505

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
=1419.611 / 1082.972
=1.3108

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))
=(15.744 / (15.744 + 75.435)) / (20.21 / (20.21 + 116.585))
=0.17267134 / 0.14773932
=1.1688

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)
=(420.128 / 1419.611) / (320.004 / 1082.972)
=0.29594586 / 0.29548686
=1.0016

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)
=((696.31 + 163.337) / 1556.006) / ((422.161 + 167.385) / 1174.364)
=0.55247023 / 0.502013
=1.1005

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
=(70.79 - -176.67 - -227.357) / 1556.006
=0.3052

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 -0.94 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 1.08740.149311.01766.1410.99071.07350.97511.0106
GMI 0.93471.01511.10340.8960.93380.96780.89170.9305
AQI 1.01621.01983.27973.41190.96731.03420.98570.9962
SGI 1.08491.08341.08080.98120.92540.97961.09181.38
DEPI 0.98731.02410.98480.87980.77380.98021.09841.4063
SGAI 1.13491.00640.95721.0181.02221.05150.950.9662
LVGI 0.8920.80851.68961.8240.91090.93890.85681.1492
TATA 0.02730.12080.1326-0.0679-0.0707-0.07290.08370.234
M-score -2.21-2.548.182.55-2.93-2.77-2.03-1.07

Conn's Inc Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
DSRI 1.00241.06580.97511.10441.18741.05961.01061.08960.97670.8803
GMI 0.98440.9250.89170.87640.87830.91080.93050.94950.95510.9661
AQI 1.021.03490.98570.96990.98760.98860.99620.99970.9880.9505
SGI 1.05751.0611.09181.14241.1911.28721.381.39651.39031.3108
DEPI 1.28421.01721.09841.05221.02911.27671.40631.41391.32581.1688
SGAI 0.97530.95910.950.95410.98010.99860.96620.98350.99761.0016
LVGI 0.98860.95310.85680.86230.88270.96611.14921.17031.15591.1005
TATA 0.02050.04510.08370.13630.15250.24260.27550.27430.33610.3052
M-score -2.29-2.16-2.03-1.64-1.45-1.04-0.88-0.79-0.62-0.94
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