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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 7 years, the highest Beneish M-Score of Francescas Holdings Corp was -2.02. The lowest was -3.28. And the median was -2.70.
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 * 0.8272||+||0.528 * 1.0335||+||0.404 * 0.7254||+||0.892 * 1.1393||+||0.115 * 0.8875|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0961||+||4.679 * -0.1256||-||0.327 * 1.1566|
|This Year (Oct15) TTM:||Last Year (Oct14) TTM:|
|Accounts Receivable was $8.7 Mil.|
Revenue was 103.728 + 106.033 + 95.011 + 107.644 = $412.4 Mil.
Gross Profit was 48.366 + 50.308 + 44.893 + 49.246 = $192.8 Mil.
Total Current Assets was $106.3 Mil.
Total Assets was $193.7 Mil.
Property, Plant and Equipment(Net PPE) was $79.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $15.8 Mil.
Selling, General & Admin. Expense(SGA) was $144.0 Mil.
Total Current Liabilities was $30.8 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 6.951 + 9.304 + 7.241 + 5.971 = $29.5 Mil.
Non Operating Income was 0.029 + -0.054 + -0.066 + -0.113 = $-0.2 Mil.
Cash Flow from Operations was 5.872 + 8.899 + 15.596 + 23.628 = $54.0 Mil.
|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.
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)|
|=||(8.683 / 412.416)||/||(9.214 / 361.993)|
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)|
|=||(50.308 / 361.993)||/||(48.366 / 412.416)|
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 - (106.343 + 79.017) / 193.675)||/||(1 - (77.968 + 70.646) / 157.963)|
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))|
|=||(12.297 / (12.297 + 70.646))||/||(15.848 / (15.848 + 79.017))|
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)|
|=||(143.951 / 412.416)||/||(115.27 / 361.993)|
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 + 30.75) / 193.675)||/||((0 + 21.684) / 157.963)|
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|
|=||(29.467 - -0.204||-||53.995)||/||193.675|
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.
Francescas Holdings Corp has a M-score of -3.28 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