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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 Ennis Inc was -1.49. The lowest was -3.90. And the median was -2.56.
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 Ennis 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 * 0.9545||+||0.528 * 1.0558||+||0.404 * 0.6687||+||0.892 * 1.0715||+||0.115 * 0.8016|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9665||+||4.679 * -0.2435||-||0.327 * 1.2568|
|This Year (Nov14) TTM:||Last Year (Nov13) TTM:|
|Accounts Receivable was $63.2 Mil.|
Revenue was 146.971 + 151.841 + 141.186 + 132.138 = $572.1 Mil.
Gross Profit was 36.516 + 38.188 + 35.388 + 33.58 = $143.7 Mil.
Total Current Assets was $220.2 Mil.
Total Assets was $444.7 Mil.
Property, Plant and Equipment(Net PPE) was $87.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $16.1 Mil.
Selling, General & Admin. Expense(SGA) was $88.5 Mil.
Total Current Liabilities was $41.5 Mil.
Long-Term Debt was $101.5 Mil.
Net Income was -71.179 + 10.016 + 8.032 + -14.467 = $-67.6 Mil.
Non Operating Income was 0.347 + 0.057 + -0.343 + 0.045 = $0.1 Mil.
Cash Flow from Operations was 14.06 + 19.026 + 13.312 + -5.816 = $40.6 Mil.
|Accounts Receivable was $61.8 Mil.
Revenue was 136.55 + 135.288 + 138.466 + 123.638 = $533.9 Mil.
Gross Profit was 37.759 + 36.659 + 35.795 + 31.343 = $141.6 Mil.
Total Current Assets was $207.0 Mil.
Total Assets was $557.6 Mil.
Property, Plant and Equipment(Net PPE) was $94.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $13.3 Mil.
Selling, General & Admin. Expense(SGA) was $85.4 Mil.
Total Current Liabilities was $47.2 Mil.
Long-Term Debt was $95.5 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)|
|=||(63.178 / 572.136)||/||(61.77 / 533.942)|
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)|
|=||(38.188 / 533.942)||/||(36.516 / 572.136)|
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 - (220.236 + 87.656) / 444.717)||/||(1 - (207.041 + 93.996) / 557.597)|
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))|
|=||(13.315 / (13.315 + 93.996))||/||(16.053 / (16.053 + 87.656))|
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)|
|=||(88.485 / 572.136)||/||(85.437 / 533.942)|
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)|
|=||((101.5 + 41.546) / 444.717)||/||((95.5 + 47.204) / 557.597)|
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|
|=||(-67.598 - 0.106||-||40.582)||/||444.717|
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.
Ennis Inc has a M-score of -3.80 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
Ennis Inc Annual Data
Ennis Inc Quarterly Data