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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 -1.91. The lowest was -2.97. 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 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 * 1.1765||+||0.528 * 0.9252||+||0.404 * 1.02||+||0.892 * 1.0718||+||0.115 * 1.0709|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0373||+||4.679 * -0.0944||-||0.327 * 0.6802|
|This Year (Oct15) TTM:||Last Year (Oct14) TTM:|
|Accounts Receivable was $26 Mil.|
Revenue was 546.616 + 535.582 + 502.378 + 725.801 = $2,310 Mil.
Gross Profit was 191.089 + 177.19 + 166.444 + 229.998 = $765 Mil.
Total Current Assets was $541 Mil.
Total Assets was $1,197 Mil.
Property, Plant and Equipment(Net PPE) was $444 Mil.
Depreciation, Depletion and Amortization(DDA) was $75 Mil.
Selling, General & Admin. Expense(SGA) was $573 Mil.
Total Current Liabilities was $339 Mil.
Long-Term Debt was $0 Mil.
Net Income was 26.307 + 21.028 + 13.062 + 41.79 = $102 Mil.
Non Operating Income was 0.07 + -0.419 + 0.349 + 0.988 = $1 Mil.
Cash Flow from Operations was -7.85 + 58.115 + 5.368 + 158.563 = $214 Mil.
|Accounts Receivable was $20 Mil.
Revenue was 497.608 + 481.42 + 460.652 + 715.88 = $2,156 Mil.
Gross Profit was 157.558 + 136.025 + 137.373 + 229.118 = $660 Mil.
Total Current Assets was $640 Mil.
Total Assets was $1,278 Mil.
Property, Plant and Equipment(Net PPE) was $416 Mil.
Depreciation, Depletion and Amortization(DDA) was $76 Mil.
Selling, General & Admin. Expense(SGA) was $515 Mil.
Total Current Liabilities was $333 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)|
|=||(25.81 / 2310.377)||/||(20.468 / 2155.56)|
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)|
|=||(177.19 / 2155.56)||/||(191.089 / 2310.377)|
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 - (541.135 + 443.505) / 1196.945)||/||(1 - (640.049 + 415.78) / 1278.07)|
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))|
|=||(75.775 / (75.775 + 415.78))||/||(74.575 / (74.575 + 443.505))|
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)|
|=||(573.066 / 2310.377)||/||(515.421 / 2155.56)|
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 + 339.101) / 1196.945)||/||((199.435 + 332.893) / 1278.07)|
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|
|=||(102.187 - 0.988||-||214.196)||/||1196.945|
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 -2.62 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