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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.
Ennis Inc has a M-score of -3.00 suggests that the company is not a 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 -2.57.
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 * 1.0487||+||0.528 * 1.0031||+||0.404 * 0.9901||+||0.892 * 1.0314||+||0.115 * 0.9282|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0016||+||4.679 * -0.0758||-||0.327 * 1.6973|
|This Year (May14) TTM:||Last Year (Aug13) TTM:|
|Accounts Receivable was $63.9 Mil.|
Revenue was 141.186 + 0 + 132.138 + 136.55 = $409.9 Mil.
Gross Profit was 35.388 + 0 + 33.58 + 37.759 = $106.7 Mil.
Total Current Assets was $222.4 Mil.
Total Assets was $541.9 Mil.
Property, Plant and Equipment(Net PPE) was $90.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $22.1 Mil.
Selling, General & Admin. Expense(SGA) was $65.2 Mil.
Total Current Liabilities was $42.6 Mil.
Long-Term Debt was $105.5 Mil.
Net Income was 8.032 + 0 + -14.467 + 9.349 = $2.9 Mil.
Non Operating Income was -0.343 + 0 + 0.045 + -0.253 = $-0.6 Mil.
Cash Flow from Operations was 13.312 + 38.571 + -5.816 + -1.533 = $44.5 Mil.
|Accounts Receivable was $59.1 Mil.
Revenue was 135.288 + 138.466 + 0 + 123.638 = $397.4 Mil.
Gross Profit was 36.659 + 35.795 + 0 + 31.343 = $103.8 Mil.
Total Current Assets was $191.3 Mil.
Total Assets was $487.3 Mil.
Property, Plant and Equipment(Net PPE) was $87.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $19.6 Mil.
Selling, General & Admin. Expense(SGA) was $63.1 Mil.
Total Current Liabilities was $43.5 Mil.
Long-Term Debt was $35.0 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)|
|=||(63.904 / 409.874)||/||(59.08 / 397.392)|
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)|
|=||(0 / 397.392)||/||(35.388 / 409.874)|
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 - (222.41 + 90.228) / 541.891)||/||(1 - (191.282 + 87.784) / 487.279)|
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))|
|=||(19.577 / (19.577 + 87.784))||/||(22.058 / (22.058 + 90.228))|
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)|
|=||(65.184 / 409.874)||/||(63.097 / 397.392)|
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)|
|=||((105.5 + 42.591) / 541.891)||/||((35 + 43.457) / 487.279)|
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|
|=||(2.914 - -0.551||-||44.534)||/||541.891|
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 -3.00 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