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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 -2.13. The lowest was -3.40. And the median was -2.73.
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 * 0.8194||+||0.528 * 1.047||+||0.404 * 0.9422||+||0.892 * 1.1164||+||0.115 * 0.9027|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.099||+||4.679 * -0.1297||-||0.327 * 0.8504|
|This Year (Jul15) TTM:||Last Year (Jul14) TTM:|
|Accounts Receivable was $9.1 Mil.|
Revenue was 106.033 + 95.011 + 107.644 + 87.11 = $395.8 Mil.
Gross Profit was 50.308 + 44.893 + 49.246 + 41.185 = $185.6 Mil.
Total Current Assets was $103.0 Mil.
Total Assets was $190.3 Mil.
Property, Plant and Equipment(Net PPE) was $80.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.8 Mil.
Selling, General & Admin. Expense(SGA) was $136.5 Mil.
Total Current Liabilities was $26.8 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 9.304 + 7.241 + 5.971 + 7.27 = $29.8 Mil.
Non Operating Income was -0.054 + -0.066 + -0.113 + 0.042 = $-0.2 Mil.
Cash Flow from Operations was 8.899 + 15.596 + 23.628 + 6.533 = $54.7 Mil.
|Accounts Receivable was $9.9 Mil.
Revenue was 97.319 + 85.424 + 92.14 + 79.632 = $354.5 Mil.
Gross Profit was 45.315 + 41.832 + 46.58 + 40.357 = $174.1 Mil.
Total Current Assets was $76.6 Mil.
Total Assets was $154.0 Mil.
Property, Plant and Equipment(Net PPE) was $71.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $11.6 Mil.
Selling, General & Admin. Expense(SGA) was $111.2 Mil.
Total Current Liabilities was $20.5 Mil.
Long-Term Debt was $5.0 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)|
|=||(9.061 / 395.798)||/||(9.905 / 354.515)|
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)|
|=||(44.893 / 354.515)||/||(50.308 / 395.798)|
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 - (102.995 + 80.176) / 190.274)||/||(1 - (76.648 + 71.217) / 153.965)|
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))|
|=||(11.646 / (11.646 + 71.217))||/||(14.785 / (14.785 + 80.176))|
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)|
|=||(136.475 / 395.798)||/||(111.226 / 354.515)|
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 + 26.766) / 190.274)||/||((5 + 20.468) / 153.965)|
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|
|=||(29.786 - -0.191||-||54.656)||/||190.274|
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 -3.13 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