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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 -2.63.
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 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 * 1.0857||+||0.528 * 0.9216||+||0.404 * 1.1467||+||0.892 * 0.6272||+||0.115 * 1.1071|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0851||+||4.679 * -0.1758||-||0.327 * 0.9021|
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
|This Year (Feb17) TTM:||Last Year (Feb16) TTM:|
|Accounts Receivable was $37.4 Mil.|
Revenue was 86.572 + 88.66 + 91.246 + 90.41 = $356.9 Mil.
Gross Profit was 24.926 + 25.292 + 27.038 + 26.694 = $104.0 Mil.
Total Current Assets was $149.3 Mil.
Total Assets was $324.3 Mil.
Property, Plant and Equipment(Net PPE) was $50.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.4 Mil.
Selling, General & Admin. Expense(SGA) was $63.2 Mil.
Total Current Liabilities was $30.0 Mil.
Long-Term Debt was $30.0 Mil.
Net Income was 6.134 + 5.74 + 6.784 + -16.878 = $1.8 Mil.
Non Operating Income was -0.179 + 0.088 + 0.011 + -0.007 = $-0.1 Mil.
Cash Flow from Operations was 16.327 + 13.482 + 14.031 + 15.047 = $58.9 Mil.
|Accounts Receivable was $54.9 Mil.
Revenue was 274.233 + 97.516 + 100.455 + 96.769 = $569.0 Mil.
Gross Profit was 61.693 + 29.719 + 31.363 + 29.964 = $152.7 Mil.
Total Current Assets was $179.0 Mil.
Total Assets was $392.2 Mil.
Property, Plant and Equipment(Net PPE) was $81.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.3 Mil.
Selling, General & Admin. Expense(SGA) was $92.8 Mil.
Total Current Liabilities was $40.4 Mil.
Long-Term Debt was $40.0 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)|
|=||(37.368 / 356.888)||/||(54.871 / 568.973)|
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)|
|=||(152.739 / 568.973)||/||(103.95 / 356.888)|
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 - (149.25 + 49.995) / 324.285)||/||(1 - (178.975 + 81.334) / 392.188)|
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))|
|=||(17.349 / (17.349 + 81.334))||/||(9.438 / (9.438 + 49.995))|
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)|
|=||(63.159 / 356.888)||/||(92.792 / 568.973)|
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)|
|=||((30 + 29.968) / 324.285)||/||((40 + 40.4) / 392.188)|
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|
|=||(1.78 - -0.087||-||58.887)||/||324.285|
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 -3.51 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