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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 9 years, the highest Beneish M-Score of Express, Inc. was -1.86. The lowest was -3.15. And the median was -2.65.
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 * 0.8522||+||0.528 * 0.9225||+||0.404 * 0.9998||+||0.892 * 1.065||+||0.115 * 1.1039|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0373||+||4.679 * -0.1055||-||0.327 * 1.1869|
|This Year (Apr16) TTM:||Last Year (Apr15) TTM:|
|Accounts Receivable was $17 Mil.|
Revenue was 502.909 + 765.553 + 546.616 + 535.582 = $2,351 Mil.
Gross Profit was 167.748 + 260.554 + 191.089 + 177.19 = $797 Mil.
Total Current Assets was $459 Mil.
Total Assets was $1,128 Mil.
Property, Plant and Equipment(Net PPE) was $447 Mil.
Depreciation, Depletion and Amortization(DDA) was $73 Mil.
Selling, General & Admin. Expense(SGA) was $590 Mil.
Total Current Liabilities was $343 Mil.
Long-Term Debt was $0 Mil.
Net Income was 12.882 + 56.116 + 26.307 + 21.028 = $116 Mil.
Non Operating Income was 0.69 + 28.97 + -2.484 + -0.419 = $27 Mil.
Cash Flow from Operations was -15.661 + 173.97 + -7.85 + 58.115 = $209 Mil.
|Accounts Receivable was $18 Mil.
Revenue was 502.378 + 725.801 + 497.608 + 481.42 = $2,207 Mil.
Gross Profit was 166.444 + 229.998 + 157.558 + 136.025 = $690 Mil.
Total Current Assets was $457 Mil.
Total Assets was $1,083 Mil.
Property, Plant and Equipment(Net PPE) was $414 Mil.
Depreciation, Depletion and Amortization(DDA) was $76 Mil.
Selling, General & Admin. Expense(SGA) was $534 Mil.
Total Current Liabilities was $278 Mil.
Long-Term Debt was $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)|
|=||(16.538 / 2350.66)||/||(18.221 / 2207.207)|
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)|
|=||(690.025 / 2207.207)||/||(796.581 / 2350.66)|
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 - (459.459 + 447.274) / 1127.7)||/||(1 - (456.513 + 414.036) / 1082.748)|
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))|
|=||(75.752 / (75.752 + 414.036))||/||(72.878 / (72.878 + 447.274))|
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)|
|=||(590.333 / 2350.66)||/||(534.357 / 2207.207)|
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)|
|=||((0 + 343.052) / 1127.7)||/||((0 + 277.515) / 1082.748)|
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|
|=||(116.333 - 26.757||-||208.574)||/||1127.7|
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 -3.15 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