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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 4.85. The lowest was -4.30. 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 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 * 0.9074||+||0.528 * 1.0028||+||0.404 * 1.0419||+||0.892 * 1.0297||+||0.115 * 0.9123|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0316||+||4.679 * -0.0229||-||0.327 * 1.0997|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $147.6 Mil.|
Revenue was 169.532 + 167.623 + 176.023 + 202.774 = $716.0 Mil.
Gross Profit was 95.442 + 94.046 + 98.771 + 111.633 = $399.9 Mil.
Total Current Assets was $330.8 Mil.
Total Assets was $755.2 Mil.
Property, Plant and Equipment(Net PPE) was $110.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.1 Mil.
Selling, General & Admin. Expense(SGA) was $261.8 Mil.
Total Current Liabilities was $47.0 Mil.
Long-Term Debt was $268.5 Mil.
Net Income was 11.173 + 13.339 + 16.788 + 26.941 = $68.2 Mil.
Non Operating Income was -7.913 + 0 + 0 + 0 = $-7.9 Mil.
Cash Flow from Operations was 23.213 + 14.479 + 27.43 + 28.351 = $93.5 Mil.
|Accounts Receivable was $158.0 Mil.
Revenue was 175 + 165.326 + 169.777 + 185.203 = $695.3 Mil.
Gross Profit was 98.863 + 93.921 + 96.456 + 100.192 = $389.4 Mil.
Total Current Assets was $308.2 Mil.
Total Assets was $704.7 Mil.
Property, Plant and Equipment(Net PPE) was $115.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.0 Mil.
Selling, General & Admin. Expense(SGA) was $246.5 Mil.
Total Current Liabilities was $50.2 Mil.
Long-Term Debt was $217.5 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)|
|=||(147.6 / 715.952)||/||(157.972 / 695.306)|
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)|
|=||(94.046 / 695.306)||/||(95.442 / 715.952)|
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 - (330.758 + 110.285) / 755.202)||/||(1 - (308.213 + 115.115) / 704.667)|
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))|
|=||(17.016 / (17.016 + 115.115))||/||(18.126 / (18.126 + 110.285))|
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)|
|=||(261.805 / 715.952)||/||(246.468 / 695.306)|
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)|
|=||((268.5 + 46.972) / 755.202)||/||((217.5 + 50.178) / 704.667)|
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|
|=||(68.241 - -7.913||-||93.473)||/||755.202|
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 -2.68 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