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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 -2.51. The lowest was -3.00. And the median was -2.88.
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 * 1.0993||+||0.528 * 0.9856||+||0.404 * 0.7571||+||0.892 * 1.1639||+||0.115 * 0.849|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0146||+||4.679 * -0.1269||-||0.327 * 1.117|
|This Year (Jan16) TTM:||Last Year (Jan15) TTM:|
|Accounts Receivable was $3.2 Mil.|
Revenue was 134.605 + 103.728 + 106.033 + 95.011 = $439.4 Mil.
Gross Profit was 66.137 + 48.366 + 50.308 + 44.893 = $209.7 Mil.
Total Current Assets was $110.8 Mil.
Total Assets was $193.6 Mil.
Property, Plant and Equipment(Net PPE) was $77.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $16.8 Mil.
Selling, General & Admin. Expense(SGA) was $147.4 Mil.
Total Current Liabilities was $30.6 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 14.656 + 6.951 + 9.304 + 7.241 = $38.2 Mil.
Non Operating Income was -0.06 + 0.029 + -0.054 + -0.066 = $-0.2 Mil.
Cash Flow from Operations was 32.5 + 5.872 + 8.899 + 15.596 = $62.9 Mil.
|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.
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)|
|=||(3.241 / 439.377)||/||(2.533 / 377.497)|
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)|
|=||(48.366 / 377.497)||/||(66.137 / 439.377)|
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 - (110.769 + 77.894) / 193.577)||/||(1 - (85.899 + 74.095) / 165.545)|
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))|
|=||(13.151 / (13.151 + 74.095))||/||(16.816 / (16.816 + 77.894))|
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)|
|=||(147.387 / 439.377)||/||(124.804 / 377.497)|
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 + 30.633) / 193.577)||/||((0 + 23.454) / 165.545)|
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|
|=||(38.152 - -0.151||-||62.867)||/||193.577|
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 -3.00 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