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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 8 years, the highest Beneish M-Score of Express, Inc. was -2.23. The lowest was -2.86. And the median was -2.67.
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 Express, 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 * 1.3719||+||0.528 * 1.0596||+||0.404 * 0.8972||+||0.892 * 0.9758||+||0.115 * 0.9914|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0649||+||4.679 * -0.07||-||0.327 * 0.9041|
|This Year (Jan15) TTM:||Last Year (Jan14) TTM:|
|Accounts Receivable was $23 Mil.|
Revenue was 725.801 + 497.608 + 481.42 + 460.652 = $2,165 Mil.
Gross Profit was 229.998 + 157.558 + 136.025 + 137.373 = $661 Mil.
Total Current Assets was $654 Mil.
Total Assets was $1,278 Mil.
Property, Plant and Equipment(Net PPE) was $408 Mil.
Depreciation, Depletion and Amortization(DDA) was $76 Mil.
Selling, General & Admin. Expense(SGA) was $524 Mil.
Total Current Liabilities was $287 Mil.
Long-Term Debt was $200 Mil.
Net Income was 41.79 + 14.585 + 6.867 + 5.083 = $68 Mil.
Non Operating Income was 1.302 + -0.16 + 0.022 + 0.025 = $1 Mil.
Cash Flow from Operations was 158.563 + -6.798 + 35.992 + -31.187 = $157 Mil.
|Accounts Receivable was $17 Mil.
Revenue was 715.88 + 503.808 + 490.075 + 509.362 = $2,219 Mil.
Gross Profit was 229.118 + 165.265 + 152.547 + 170.777 = $718 Mil.
Total Current Assets was $583 Mil.
Total Assets was $1,183 Mil.
Property, Plant and Equipment(Net PPE) was $376 Mil.
Depreciation, Depletion and Amortization(DDA) was $70 Mil.
Selling, General & Admin. Expense(SGA) was $504 Mil.
Total Current Liabilities was $299 Mil.
Long-Term Debt was $199 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)|
|=||(23.272 / 2165.481)||/||(17.384 / 2219.125)|
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)|
|=||(157.558 / 2219.125)||/||(229.998 / 2165.481)|
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 - (654.236 + 407.607) / 1278.15)||/||(1 - (583.461 + 376.122) / 1182.67)|
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))|
|=||(69.81 / (69.81 + 376.122))||/||(76.437 / (76.437 + 407.607))|
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)|
|=||(524.041 / 2165.481)||/||(504.277 / 2219.125)|
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)|
|=||((199.527 + 287.459) / 1278.15)||/||((199.17 + 299.207) / 1182.67)|
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|
|=||(68.325 - 1.189||-||156.57)||/||1278.15|
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.
Express, Inc. has a M-score of -2.48 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
Express, Inc. Annual Data
Express, Inc. Quarterly Data