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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 -1.33. The lowest was -3.73. And the median was -2.75.
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 * 0.8855||+||0.528 * 0.9971||+||0.404 * 1.0832||+||0.892 * 0.9609||+||0.115 * 0.923|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0497||+||4.679 * -0.0452||-||0.327 * 0.9764|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $36.4 Mil.|
Revenue was 44.228 + 53.702 + 104.993 + 106.092 = $309.0 Mil.
Gross Profit was 12.442 + 15.383 + 36.323 + 35.397 = $99.5 Mil.
Total Current Assets was $220.4 Mil.
Total Assets was $299.8 Mil.
Property, Plant and Equipment(Net PPE) was $25.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $8.0 Mil.
Selling, General & Admin. Expense(SGA) was $75.6 Mil.
Total Current Liabilities was $32.5 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -3.068 + -1.336 + 9.768 + 9.847 = $15.2 Mil.
Non Operating Income was 0.048 + -0.035 + -0.036 + 0 = $-0.0 Mil.
Cash Flow from Operations was -17.632 + 30.885 + 33.873 + -18.337 = $28.8 Mil.
|Accounts Receivable was $42.7 Mil.
Revenue was 48.257 + 54.56 + 106.295 + 112.487 = $321.6 Mil.
Gross Profit was 14.599 + 15.704 + 36.266 + 36.727 = $103.3 Mil.
Total Current Assets was $216.7 Mil.
Total Assets was $291.9 Mil.
Property, Plant and Equipment(Net PPE) was $26.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $7.6 Mil.
Selling, General & Admin. Expense(SGA) was $75.0 Mil.
Total Current Liabilities was $32.4 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)|
|=||(36.363 / 309.015)||/||(42.737 / 321.599)|
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)|
|=||(15.383 / 321.599)||/||(12.442 / 309.015)|
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 - (220.411 + 25.51) / 299.768)||/||(1 - (216.685 + 26.797) / 291.884)|
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))|
|=||(7.556 / (7.556 + 26.797))||/||(7.981 / (7.981 + 25.51))|
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)|
|=||(75.605 / 309.015)||/||(74.957 / 321.599)|
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 + 32.487) / 299.768)||/||((0 + 32.397) / 291.884)|
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|
|=||(15.211 - -0.023||-||28.789)||/||299.768|
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 -2.81 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
CSS Industries Inc Annual Data
CSS Industries Inc Quarterly Data