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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 6 years, the highest Beneish M-Score of Francescas Holdings Corp was -2.74. The lowest was -3.40. And the median was -3.07.
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 Francescas Holdings Corp 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 * 0.8654||+||0.528 * 1.0862||+||0.404 * 1.3108||+||0.892 * 1.0809||+||0.115 * 0.9248|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1296||+||4.679 * -0.1131||-||0.327 * 0.4568|
|This Year (Oct14) TTM:||Last Year (Oct13) TTM:|
|Accounts Receivable was $9.2 Mil.|
Revenue was 87.11 + 97.319 + 85.424 + 92.14 = $362.0 Mil.
Gross Profit was 41.185 + 45.315 + 41.832 + 46.58 = $174.9 Mil.
Total Current Assets was $78.0 Mil.
Total Assets was $158.0 Mil.
Property, Plant and Equipment(Net PPE) was $70.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.3 Mil.
Selling, General & Admin. Expense(SGA) was $115.3 Mil.
Total Current Liabilities was $21.7 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 7.27 + 10.307 + 8.56 + 10.612 = $36.7 Mil.
Non Operating Income was 0.042 + 0.056 + 0.103 + 0.081 = $0.3 Mil.
Cash Flow from Operations was 6.533 + 14.573 + 9.71 + 23.518 = $54.3 Mil.
|Accounts Receivable was $9.9 Mil.
Revenue was 79.632 + 89.566 + 78.987 + 86.7 = $334.9 Mil.
Gross Profit was 40.357 + 47.756 + 41.372 + 46.27 = $175.8 Mil.
Total Current Assets was $82.2 Mil.
Total Assets was $146.2 Mil.
Property, Plant and Equipment(Net PPE) was $57.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.1 Mil.
Selling, General & Admin. Expense(SGA) was $94.4 Mil.
Total Current Liabilities was $18.9 Mil.
Long-Term Debt was $25.0 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)|
|=||(9.214 / 361.993)||/||(9.85 / 334.885)|
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)|
|=||(45.315 / 334.885)||/||(41.185 / 361.993)|
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 - (77.968 + 70.646) / 157.963)||/||(1 - (82.24 + 57.359) / 146.2)|
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))|
|=||(9.114 / (9.114 + 57.359))||/||(12.297 / (12.297 + 70.646))|
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)|
|=||(115.27 / 361.993)||/||(94.4 / 334.885)|
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 + 21.684) / 157.963)||/||((25 + 18.935) / 146.2)|
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|
|=||(36.749 - 0.282||-||54.334)||/||157.963|
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.
Francescas Holdings Corp has a M-score of -2.74 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
Francescas Holdings Corp Annual Data
Francescas Holdings Corp Quarterly Data