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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 -1.90. The lowest was -2.97. And the median was -2.56.
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 * 1.2207||+||0.528 * 1.0847||+||0.404 * 0.9217||+||0.892 * 0.9618||+||0.115 * 1.0549|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0621||+||4.679 * -0.0628||-||0.327 * 0.8847|
|This Year (Oct14) TTM:||Last Year (Oct13) TTM:|
|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.
Net Income was 14.585 + 6.867 + 5.083 + 47.926 = $74 Mil.
Non Operating Income was -0.16 + 0.022 + 0.025 + -0.613 = $-1 Mil.
Cash Flow from Operations was -6.798 + 35.992 + -31.187 + 157.435 = $155 Mil.
|Accounts Receivable was $17 Mil.
Revenue was 503.808 + 490.075 + 509.362 + 737.869 = $2,241 Mil.
Gross Profit was 165.265 + 152.547 + 170.777 + 255.813 = $744 Mil.
Total Current Assets was $593 Mil.
Total Assets was $1,169 Mil.
Property, Plant and Equipment(Net PPE) was $355 Mil.
Depreciation, Depletion and Amortization(DDA) was $69 Mil.
Selling, General & Admin. Expense(SGA) was $505 Mil.
Total Current Liabilities was $351 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)|
|=||(20.468 / 2155.56)||/||(17.433 / 2241.114)|
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)|
|=||(136.025 / 2241.114)||/||(157.558 / 2155.56)|
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 - (640.049 + 415.78) / 1278.07)||/||(1 - (592.938 + 355.288) / 1168.726)|
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))|
|=||(68.994 / (68.994 + 355.288))||/||(75.775 / (75.775 + 415.78))|
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)|
|=||(515.421 / 2155.56)||/||(504.54 / 2241.114)|
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)|
|=||((199.435 + 332.893) / 1278.07)||/||((199.086 + 351.118) / 1168.726)|
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|
|=||(74.461 - -0.726||-||155.442)||/||1278.07|
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 -2.56 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