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Conn's Inc (NAS:CONN)
Beneish M-Score
-0.90 (As of Today)

Warning Sign:

Beneish M-Score -0.90 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 -0.90 signals that the company is a manipulator.

CONN' s 10-Year Beneish M-Score Range
Min: -3.2   Max: 0.88
Current: -0.9

-3.2
0.88

During the past 13 years, the highest Beneish M-Score of Conn's Inc was 0.88. The lowest was -3.20. And the median was -2.16.


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 * 0.9895+0.528 * 0.9305+0.404 * 0.9962+0.892 * 1.38+0.115 * 1.4063
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9662+4.679 * 0.2755-0.327 * 1.1492
=-0.90

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

This Year (Jan14) TTM:Last Year (Jan13) TTM:
Accounts Receivable was $579 Mil.
Revenue was 361.141 + 310.876 + 270.689 + 251.063 = $1,194 Mil.
Gross Profit was 182.587 + 157.603 + 133.331 + 126.2 = $600 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 $342 Mil.
Total Current Liabilities was $143 Mil.
Long-Term Debt was $536 Mil.
Net Income was 27.735 + 24.376 + 19.162 + 22.176 = $93 Mil.
Non Operating Income was -0.048 + -53.83 + 0.032 + 0.006 = $-54 Mil.
Cash Flow from Operations was -100.563 + -70.511 + -32.675 + -6.513 = $-210 Mil.
Accounts Receivable was $424 Mil.
Revenue was 250.344 + 206.401 + 207.436 + 200.851 = $865 Mil.
Gross Profit was 119.251 + 99.191 + 95.085 + 90.858 = $404 Mil.
Total Current Assets was $528 Mil.
Total Assets was $910 Mil.
Property, Plant and Equipment(Net PPE) was $47 Mil.
Depreciation, Depletion and Amortization(DDA) was $14 Mil.
Selling, General & Admin. Expense(SGA) was $256 Mil.
Total Current Liabilities was $151 Mil.
Long-Term Debt was $263 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)
=(578.747 / 1193.769) / (423.809 / 865.032)
=0.48480652 / 0.48993448
=0.9895

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)
=(157.603 / 865.032) / (182.587 / 1193.769)
=0.46747982 / 0.50237609
=0.9305

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 - (735.595 + 86.842) / 1297.986) / (1 - (528.244 + 46.994) / 909.857)
=0.36637452 / 0.36777098
=0.9962

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
=1193.769 / 865.032
=1.38

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))
=(13.891 / (13.891 + 46.994)) / (16.817 / (16.817 + 86.842))
=0.22815143 / 0.16223386
=1.4063

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)
=(341.645 / 1193.769) / (256.214 / 865.032)
=0.28619021 / 0.2961902
=0.9662

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)
=((535.631 + 142.607) / 1297.986) / ((262.531 + 151.163) / 909.857)
=0.52253106 / 0.45468024
=1.1492

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
=(93.449 - -53.84 - -210.262) / 1297.986
=0.2755

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 -0.90 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

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
DSRI 0.90280.97490.99060.99991.0591.07721.12171.06221.0520.9895
GMI 0.93890.96810.97290.98440.9250.89170.87640.87830.91080.9305
AQI 0.95031.02761.03771.021.03490.98570.96990.98760.98860.9962
SGI 1.00660.97940.99771.05751.0611.09181.14241.1911.28721.38
DEPI 0.89951.08221.17591.41861.15781.09841.05221.02911.27671.4063
SGAI 1.04071.04171.01950.96590.95010.950.95410.98010.99860.9662
LVGI 0.91490.92750.95820.98860.95310.85680.86230.88270.96611.1492
TATA -0.124-0.0729-0.04580.02050.04510.08370.13630.15250.24260.2755
M-score -3.19-2.84-2.67-2.28-2.14-1.93-1.62-1.56-1.05-0.90
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