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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 CSS Industries Inc was -1.36. The lowest was -3.75. And the median was -2.72.
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 CSS Industries 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 * 1.3212||+||0.528 * 1.053||+||0.404 * 1.2357||+||0.892 * 1.0208||+||0.115 * 1.2299|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0452||+||4.679 * 0.0598||-||0.327 * 0.9799|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $106.5 Mil.|
Revenue was 117.153 + 101.291 + 45.318 + 56.744 = $320.5 Mil.
Gross Profit was 36.978 + 31.6 + 12.297 + 16.85 = $97.7 Mil.
Total Current Assets was $253.0 Mil.
Total Assets was $361.4 Mil.
Property, Plant and Equipment(Net PPE) was $36.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $8.5 Mil.
Selling, General & Admin. Expense(SGA) was $79.7 Mil.
Total Current Liabilities was $48.7 Mil.
Long-Term Debt was $0.5 Mil.
Net Income was 29.969 + 6.992 + -3.286 + -0.589 = $33.1 Mil.
Non Operating Income was 19.821 + 0.387 + 0.091 + 0.296 = $20.6 Mil.
Cash Flow from Operations was 16.424 + -21.232 + -20.794 + 16.496 = $-9.1 Mil.
|Accounts Receivable was $79.0 Mil.
Revenue was 104.568 + 111.477 + 44.228 + 53.702 = $314.0 Mil.
Gross Profit was 35.188 + 37.791 + 12.442 + 15.383 = $100.8 Mil.
Total Current Assets was $245.2 Mil.
Total Assets was $324.4 Mil.
Property, Plant and Equipment(Net PPE) was $26.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $8.2 Mil.
Selling, General & Admin. Expense(SGA) was $74.7 Mil.
Total Current Liabilities was $45.1 Mil.
Long-Term Debt was $0.0 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)|
|=||(106.514 / 320.506)||/||(78.978 / 313.975)|
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)|
|=||(100.804 / 313.975)||/||(97.725 / 320.506)|
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 - (253.002 + 35.998) / 361.361)||/||(1 - (245.195 + 26.592) / 324.35)|
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))|
|=||(8.172 / (8.172 + 26.592))||/||(8.506 / (8.506 + 35.998))|
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)|
|=||(79.671 / 320.506)||/||(74.675 / 313.975)|
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)|
|=||((0.516 + 48.735) / 361.361)||/||((0 + 45.112) / 324.35)|
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|
|=||(33.086 - 20.595||-||-9.106)||/||361.361|
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.
CSS Industries Inc has a M-score of -1.74 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
CSS Industries Inc Annual Data
CSS Industries Inc Quarterly Data