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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 -1.02. The lowest was -3.36. 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 * 0.821||+||0.528 * 0.9799||+||0.404 * 0.7585||+||0.892 * 1.1528||+||0.115 * 0.8931|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.954||+||4.679 * -0.1461||-||0.327 * 1.1743|
|This Year (Oct16) TTM:||Last Year (Oct15) TTM:|
|Accounts Receivable was $8.2 Mil.|
Revenue was 119.47 + 115.26 + 106.113 + 134.605 = $475.4 Mil.
Gross Profit was 57.627 + 53.937 + 49.13 + 66.137 = $226.8 Mil.
Total Current Assets was $89.2 Mil.
Total Assets was $178.0 Mil.
Property, Plant and Equipment(Net PPE) was $83.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.9 Mil.
Selling, General & Admin. Expense(SGA) was $158.3 Mil.
Total Current Liabilities was $33.2 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 9.694 + 10.591 + 7.081 + 14.656 = $42.0 Mil.
Non Operating Income was 0.079 + 0.039 + 0 + -0.06 = $0.1 Mil.
Cash Flow from Operations was 10.005 + 23.565 + 1.899 + 32.5 = $68.0 Mil.
|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 $15.7 Mil.
Selling, General & Admin. Expense(SGA) was $144.0 Mil.
Total Current Liabilities was $30.8 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)|
|=||(8.218 / 475.448)||/||(8.683 / 412.416)|
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)|
|=||(192.813 / 412.416)||/||(226.831 / 475.448)|
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 - (89.171 + 82.992) / 177.958)||/||(1 - (106.343 + 79.017) / 193.675)|
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))|
|=||(15.664 / (15.664 + 79.017))||/||(18.87 / (18.87 + 82.992))|
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)|
|=||(158.318 / 475.448)||/||(143.951 / 412.416)|
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 + 33.179) / 177.958)||/||((0 + 30.75) / 193.675)|
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|
|=||(42.022 - 0.058||-||67.969)||/||177.958|
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 -3.36 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