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Beneish M-Score 8.82 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 Crown Crafts Inc was 8.82. The lowest was -8.46. And the median was -2.74.
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 * 13.3207||+||0.528 * 1.0273||+||0.404 * 0.8775||+||0.892 * 1.0945||+||0.115 * 0.9814|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8644||+||4.679 * -0.0394||-||0.327 * 0.7724|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $17.92 Mil.|
Revenue was 20.716 + 17.858 + 26.09 + 23.743 = $88.41 Mil.
Gross Profit was 5.706 + 4.781 + 6.794 + 6.628 = $23.91 Mil.
Total Current Assets was $43.58 Mil.
Total Assets was $50.56 Mil.
Property, Plant and Equipment(Net PPE) was $0.52 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.05 Mil.
Selling, General & Admin. Expense(SGA) was $13.03 Mil.
Total Current Liabilities was $10.54 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was 1.565 + 0.927 + 2.139 + 2.046 = $6.68 Mil.
Non Operating Income was 0.004 + 0.005 + -0.011 + -0.021 = $-0.02 Mil.
Cash Flow from Operations was -0.445 + 7.696 + 2.172 + -0.733 = $8.69 Mil.
|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.
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)|
|=||(17.918 / 88.407)||/||(1.229 / 80.775)|
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)|
|=||(4.781 / 80.775)||/||(5.706 / 88.407)|
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 - (43.575 + 0.518) / 50.561)||/||(1 - (42.324 + 0.554) / 50.196)|
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))|
|=||(1.066 / (1.066 + 0.554))||/||(1.054 / (1.054 + 0.518))|
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)|
|=||(13.03 / 88.407)||/||(13.773 / 80.775)|
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 + 10.539) / 50.561)||/||((0 + 13.546) / 50.196)|
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|
|=||(6.677 - -0.023||-||8.69)||/||50.561|
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 8.82 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
Crown Crafts Inc Annual Data
Crown Crafts Inc Quarterly Data