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Beneish M-Score -0.89 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 13 years, the highest Beneish M-Score of Conn's Inc was 8.17. The lowest was -3.12. And the median was -2.36.
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 * 0.9803||+||0.528 * 0.9901||+||0.404 * 0.9964||+||0.892 * 1.2441||+||0.115 * 1.065|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0368||+||4.679 * 0.3043||-||0.327 * 1.0896|
|This Year (Jan15) TTM:||Last Year (Jan14) TTM:|
|Accounts Receivable was $643 Mil.|
Revenue was 426.748 + 370.058 + 352.964 + 335.448 = $1,485 Mil.
Gross Profit was 162.992 + 189.557 + 182.376 + 173.247 = $708 Mil.
Total Current Assets was $926 Mil.
Total Assets was $1,647 Mil.
Property, Plant and Equipment(Net PPE) was $120 Mil.
Depreciation, Depletion and Amortization(DDA) was $22 Mil.
Selling, General & Admin. Expense(SGA) was $391 Mil.
Total Current Liabilities was $145 Mil.
Long-Term Debt was $774 Mil.
Net Income was 15.458 + -3.064 + 17.65 + 28.469 = $59 Mil.
Non Operating Income was -76.291 + -65.449 + -64.683 + -46.49 = $-253 Mil.
Cash Flow from Operations was -63.107 + -74.118 + -83.354 + 30.678 = $-190 Mil.
|Accounts Receivable was $527 Mil.
Revenue was 361.141 + 310.876 + 270.689 + 251.063 = $1,194 Mil.
Gross Profit was 146.41 + 157.603 + 133.331 + 126.2 = $564 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 $303 Mil.
Total Current Liabilities was $129 Mil.
Long-Term Debt was $536 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)|
|=||(643.094 / 1485.218)||/||(527.267 / 1193.769)|
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)|
|=||(189.557 / 1193.769)||/||(162.992 / 1485.218)|
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 - (925.715 + 120.218) / 1647.322)||/||(1 - (735.595 + 86.842) / 1297.986)|
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))|
|=||(16.817 / (16.817 + 86.842))||/||(21.604 / (21.604 + 120.218))|
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)|
|=||(391.311 / 1485.218)||/||(303.351 / 1193.769)|
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)|
|=||((774.015 + 145.009) / 1647.322)||/||((535.631 + 128.927) / 1297.986)|
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|
|=||(58.513 - -252.913||-||-189.901)||/||1647.322|
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 -0.89 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