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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 First Cash Financial Services Inc was 2.83. The lowest was -3.90. And the median was -2.54.
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 First Cash Financial Services 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 * 0.9502||+||0.528 * 0.9945||+||0.404 * 1.0368||+||0.892 * 1.0787||+||0.115 * 0.934|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0183||+||4.679 * -0.0175||-||0.327 * 1.0361|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $136.7 Mil.|
Revenue was 202.774 + 175 + 165.326 + 169.777 = $712.9 Mil.
Gross Profit was 111.633 + 98.863 + 93.921 + 96.456 = $400.9 Mil.
Total Current Assets was $307.9 Mil.
Total Assets was $714.7 Mil.
Property, Plant and Equipment(Net PPE) was $113.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.5 Mil.
Selling, General & Admin. Expense(SGA) was $253.6 Mil.
Total Current Liabilities was $42.6 Mil.
Long-Term Debt was $222.4 Mil.
Net Income was 26.941 + 19.528 + 16.015 + 22.682 = $85.2 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 28.351 + 20.388 + 23.346 + 25.594 = $97.7 Mil.
|Accounts Receivable was $133.4 Mil.
Revenue was 185.203 + 173.379 + 142.354 + 159.912 = $660.8 Mil.
Gross Profit was 100.192 + 93.975 + 84.147 + 91.26 = $369.6 Mil.
Total Current Assets was $290.2 Mil.
Total Assets was $659.0 Mil.
Property, Plant and Equipment(Net PPE) was $108.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $15.4 Mil.
Selling, General & Admin. Expense(SGA) was $230.9 Mil.
Total Current Liabilities was $48.8 Mil.
Long-Term Debt was $187.0 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)|
|=||(136.703 / 712.877)||/||(133.373 / 660.848)|
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)|
|=||(98.863 / 660.848)||/||(111.633 / 712.877)|
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 - (307.875 + 113.75) / 714.675)||/||(1 - (290.222 + 108.137) / 658.973)|
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))|
|=||(15.361 / (15.361 + 108.137))||/||(17.476 / (17.476 + 113.75))|
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)|
|=||(253.572 / 712.877)||/||(230.851 / 660.848)|
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)|
|=||((222.4 + 42.559) / 714.675)||/||((187.026 + 48.761) / 658.973)|
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|
|=||(85.166 - 0||-||97.679)||/||714.675|
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.
First Cash Financial Services Inc has a M-score of -2.55 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
First Cash Financial Services Inc Annual Data
First Cash Financial Services Inc Quarterly Data