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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 4.70. The lowest was -4.33. And the median was -2.58.
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 * 1.1114||+||0.528 * 1.0122||+||0.404 * 1.0771||+||0.892 * 0.9898||+||0.115 * 1.0331|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0547||+||4.679 * -0.07||-||0.327 * 1.0659|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $144.7 Mil.|
Revenue was 183.203 + 191.424 + 169.532 + 167.623 = $711.8 Mil.
Gross Profit was 101.863 + 102.925 + 95.442 + 94.046 = $394.3 Mil.
Total Current Assets was $296.5 Mil.
Total Assets was $753.9 Mil.
Property, Plant and Equipment(Net PPE) was $120.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.3 Mil.
Selling, General & Admin. Expense(SGA) was $269.3 Mil.
Total Current Liabilities was $55.9 Mil.
Long-Term Debt was $236.0 Mil.
Net Income was 13.174 + 19.41 + 11.173 + 13.339 = $57.1 Mil.
Non Operating Income was 4.186 + 23.234 + -7.913 + 0 = $19.5 Mil.
Cash Flow from Operations was 25.076 + 27.627 + 23.213 + 14.479 = $90.4 Mil.
|Accounts Receivable was $131.5 Mil.
Revenue was 176.023 + 202.774 + 175 + 165.326 = $719.1 Mil.
Gross Profit was 98.771 + 111.633 + 98.863 + 93.921 = $403.2 Mil.
Total Current Assets was $300.2 Mil.
Total Assets was $705.3 Mil.
Property, Plant and Equipment(Net PPE) was $112.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.8 Mil.
Selling, General & Admin. Expense(SGA) was $257.9 Mil.
Total Current Liabilities was $41.8 Mil.
Long-Term Debt was $214.5 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)|
|=||(144.675 / 711.782)||/||(131.515 / 719.123)|
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)|
|=||(403.188 / 719.123)||/||(394.276 / 711.782)|
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 - (296.45 + 120.712) / 753.885)||/||(1 - (300.23 + 112.587) / 705.288)|
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))|
|=||(17.751 / (17.751 + 112.587))||/||(18.329 / (18.329 + 120.712))|
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)|
|=||(269.25 / 711.782)||/||(257.91 / 719.123)|
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)|
|=||((236.037 + 55.929) / 753.885)||/||((214.5 + 41.754) / 705.288)|
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|
|=||(57.096 - 19.507||-||90.395)||/||753.885|
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 -2.70 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