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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 Crown Crafts Inc was -0.44. The lowest was -8.46. And the median was -2.76.
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 Crown Crafts 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 * 0.0718||+||0.528 * 0.9699||+||0.404 * 0.8225||+||0.892 * 1.0054||+||0.115 * 0.952|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0565||+||4.679 * 0.0294||-||0.327 * 1.1204|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $1.23 Mil.|
Revenue was 20.441 + 15.704 + 24.011 + 20.619 = $80.78 Mil.
Gross Profit was 5.846 + 4.282 + 6.359 + 5.954 = $22.44 Mil.
Total Current Assets was $42.32 Mil.
Total Assets was $50.20 Mil.
Property, Plant and Equipment(Net PPE) was $0.55 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.07 Mil.
Selling, General & Admin. Expense(SGA) was $13.77 Mil.
Total Current Liabilities was $13.55 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was 0.83 + 0.703 + 2.028 + 1.779 = $5.34 Mil.
Non Operating Income was -0.015 + 0.005 + -0.002 + 0.013 = $0.00 Mil.
Cash Flow from Operations was -3.156 + 6.483 + -2.318 + 2.854 = $3.86 Mil.
|Accounts Receivable was $17.02 Mil.
Revenue was 20.051 + 16.613 + 23.611 + 20.07 = $80.35 Mil.
Gross Profit was 5.727 + 4.494 + 6.146 + 5.282 = $21.65 Mil.
Total Current Assets was $35.69 Mil.
Total Assets was $44.13 Mil.
Property, Plant and Equipment(Net PPE) was $0.61 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.03 Mil.
Selling, General & Admin. Expense(SGA) was $12.97 Mil.
Total Current Liabilities was $10.63 Mil.
Long-Term Debt was $0.00 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)|
|=||(1.229 / 80.775)||/||(17.015 / 80.345)|
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)|
|=||(4.282 / 80.345)||/||(5.846 / 80.775)|
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 - (42.324 + 0.554) / 50.196)||/||(1 - (35.694 + 0.613) / 44.129)|
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))|
|=||(1.028 / (1.028 + 0.613))||/||(1.066 / (1.066 + 0.554))|
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)|
|=||(13.773 / 80.775)||/||(12.967 / 80.345)|
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)|
|=||((0 + 13.546) / 50.196)||/||((0 + 10.629) / 44.129)|
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|
|=||(5.34 - 0.001||-||3.863)||/||50.196|
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.
Crown Crafts Inc has a M-score of -3.33 suggests that the company will not 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
Crown Crafts Inc Annual Data
Crown Crafts Inc Quarterly Data