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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 -2.63.
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 * 1.0601||+||0.528 * 1.0071||+||0.404 * 1.2231||+||0.892 * 1.0127||+||0.115 * 1.0048|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0004||+||4.679 * 0.0058||-||0.327 * 0.9643|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $45.1 Mil.|
Revenue was 56.744 + 104.568 + 111.477 + 44.228 = $317.0 Mil.
Gross Profit was 16.85 + 35.188 + 37.791 + 12.442 = $102.3 Mil.
Total Current Assets was $210.7 Mil.
Total Assets was $309.9 Mil.
Property, Plant and Equipment(Net PPE) was $27.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $8.3 Mil.
Selling, General & Admin. Expense(SGA) was $76.0 Mil.
Total Current Liabilities was $33.8 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was -0.589 + 9.664 + 11.229 + -3.068 = $17.2 Mil.
Non Operating Income was 0.296 + 0.009 + -0.048 + 0.048 = $0.3 Mil.
Cash Flow from Operations was 16.496 + 35.988 + -19.729 + -17.632 = $15.1 Mil.
|Accounts Receivable was $42.1 Mil.
Revenue was 53.702 + 104.993 + 106.092 + 48.257 = $313.0 Mil.
Gross Profit was 15.383 + 36.323 + 35.397 + 14.599 = $101.7 Mil.
Total Current Assets was $225.1 Mil.
Total Assets was $309.5 Mil.
Property, Plant and Equipment(Net PPE) was $25.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $7.9 Mil.
Selling, General & Admin. Expense(SGA) was $75.1 Mil.
Total Current Liabilities was $35.0 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)|
|=||(45.144 / 317.017)||/||(42.052 / 313.044)|
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)|
|=||(101.702 / 313.044)||/||(102.271 / 317.017)|
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 - (210.691 + 27.053) / 309.926)||/||(1 - (225.052 + 25.493) / 309.473)|
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))|
|=||(7.878 / (7.878 + 25.493))||/||(8.308 / (8.308 + 27.053))|
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)|
|=||(76.047 / 317.017)||/||(75.062 / 313.044)|
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 + 33.805) / 309.926)||/||((0 + 35.005) / 309.473)|
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|
|=||(17.236 - 0.305||-||15.123)||/||309.926|
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 -2.28 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