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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.
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.
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|
|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
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)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(182.376 / 1082.972)||/||(189.557 / 1419.611)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|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)|
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.
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))|
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)|
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)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(70.79 - -176.67||-||-227.357)||/||1556.006|
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.
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
Conn's Inc Annual Data
Conn's Inc Quarterly Data