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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 -2.76. The lowest was -3.40. And the median was -3.00.
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 * 0.9535||+||0.528 * 1.0998||+||0.404 * 1.2655||+||0.892 * 1.1092||+||0.115 * 0.8991|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1053||+||4.679 * -0.1355||-||0.327 * 0.4737|
|This Year (Jan15) TTM:||Last Year (Jan14) TTM:|
|Accounts Receivable was $2.5 Mil.|
Revenue was 107.644 + 87.11 + 97.319 + 85.424 = $377.5 Mil.
Gross Profit was 49.246 + 41.185 + 45.315 + 41.832 = $177.6 Mil.
Total Current Assets was $85.9 Mil.
Total Assets was $165.5 Mil.
Property, Plant and Equipment(Net PPE) was $74.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $13.2 Mil.
Selling, General & Admin. Expense(SGA) was $124.8 Mil.
Total Current Liabilities was $23.5 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 5.971 + 7.27 + 10.307 + 8.56 = $32.1 Mil.
Non Operating Income was -0.113 + 0.042 + 0.056 + 0.103 = $0.1 Mil.
Cash Flow from Operations was 23.628 + 6.533 + 14.573 + 9.71 = $54.4 Mil.
|Accounts Receivable was $2.4 Mil.
Revenue was 92.14 + 79.632 + 89.566 + 78.987 = $340.3 Mil.
Gross Profit was 46.58 + 40.357 + 47.756 + 41.372 = $176.1 Mil.
Total Current Assets was $82.4 Mil.
Total Assets was $150.5 Mil.
Property, Plant and Equipment(Net PPE) was $64.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $10.1 Mil.
Selling, General & Admin. Expense(SGA) was $101.8 Mil.
Total Current Liabilities was $20.0 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)|
|=||(2.533 / 377.497)||/||(2.395 / 340.325)|
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)|
|=||(41.185 / 340.325)||/||(49.246 / 377.497)|
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 - (85.899 + 74.095) / 165.545)||/||(1 - (82.425 + 64.131) / 150.545)|
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))|
|=||(10.054 / (10.054 + 64.131))||/||(13.151 / (13.151 + 74.095))|
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)|
|=||(124.804 / 377.497)||/||(101.795 / 340.325)|
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 + 23.454) / 165.545)||/||((25 + 20.03) / 150.545)|
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|
|=||(32.108 - 0.088||-||54.444)||/||165.545|
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 -2.76 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