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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 -1.73. The lowest was -3.77. And the median was -2.47.
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 * 0.9227||+||0.528 * 1.0573||+||0.404 * 0.738||+||0.892 * 1.0697||+||0.115 * 0.8929|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9699||+||4.679 * -0.2436||-||0.327 * 1.1782|
|This Year (Feb15) TTM:||Last Year (Feb14) TTM:|
|Accounts Receivable was $62.9 Mil.|
Revenue was 140.242 + 146.971 + 151.841 + 141.186 = $580.2 Mil.
Gross Profit was 35.384 + 36.516 + 38.188 + 35.388 = $145.5 Mil.
Total Current Assets was $216.5 Mil.
Total Assets was $453.3 Mil.
Property, Plant and Equipment(Net PPE) was $92.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $16.3 Mil.
Selling, General & Admin. Expense(SGA) was $89.9 Mil.
Total Current Liabilities was $40.2 Mil.
Long-Term Debt was $106.5 Mil.
Net Income was 8.598 + -71.179 + 10.016 + 8.032 = $-44.5 Mil.
Non Operating Income was 0.547 + 0.347 + 0.057 + -0.343 = $0.6 Mil.
Cash Flow from Operations was 18.871 + 14.06 + 19.026 + 13.312 = $65.3 Mil.
|Accounts Receivable was $63.7 Mil.
Revenue was 132.138 + 136.55 + 135.288 + 138.466 = $542.4 Mil.
Gross Profit was 33.58 + 37.759 + 36.659 + 35.795 = $143.8 Mil.
Total Current Assets was $214.1 Mil.
Total Assets was $536.3 Mil.
Property, Plant and Equipment(Net PPE) was $91.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.1 Mil.
Selling, General & Admin. Expense(SGA) was $86.7 Mil.
Total Current Liabilities was $41.9 Mil.
Long-Term Debt was $105.5 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)|
|=||(62.865 / 580.24)||/||(63.695 / 542.442)|
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)|
|=||(36.516 / 542.442)||/||(35.384 / 580.24)|
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 - (216.542 + 92.875) / 453.262)||/||(1 - (214.143 + 91.565) / 536.347)|
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))|
|=||(14.07 / (14.07 + 91.565))||/||(16.284 / (16.284 + 92.875))|
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)|
|=||(89.926 / 580.24)||/||(86.677 / 542.442)|
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)|
|=||((106.5 + 40.247) / 453.262)||/||((105.5 + 41.877) / 536.347)|
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|
|=||(-44.533 - 0.608||-||65.269)||/||453.262|
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 -3.77 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