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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.
Guess? Inc has a M-score of -2.92 suggests that the company is not a manipulator.
During the past 7 years, the highest Beneish M-Score of Guess? Inc was -1.08. The lowest was -4.39. And the median was -2.95.
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 Guess? Inc 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 * 0.9012||+||0.528 * 1.0616||+||0.404 * 1.0504||+||0.892 * 0.9548||+||0.115 * 0.9566|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0106||+||4.679 * -0.0812||-||0.327 * 0.933|
|This Year (Jul14) TTM:||Last Year (Jul13) TTM:|
|Accounts Receivable was $234 Mil.|
Revenue was 608.571 + 522.541 + 768.363 + 613.497 = $2,513 Mil.
Gross Profit was 216.777 + 176.231 + 301.949 + 228.227 = $923 Mil.
Total Current Assets was $1,202 Mil.
Total Assets was $1,740 Mil.
Property, Plant and Equipment(Net PPE) was $309 Mil.
Depreciation, Depletion and Amortization(DDA) was $87 Mil.
Selling, General & Admin. Expense(SGA) was $741 Mil.
Total Current Liabilities was $360 Mil.
Long-Term Debt was $7 Mil.
Net Income was 21.954 + -2.101 + 69.632 + 34.02 = $124 Mil.
Non Operating Income was 4.766 + -1.119 + 1.338 + 3.624 = $9 Mil.
Cash Flow from Operations was 30.596 + -0.233 + 190.653 + 35.122 = $256 Mil.
|Accounts Receivable was $272 Mil.
Revenue was 639.012 + 548.914 + 815.118 + 628.828 = $2,632 Mil.
Gross Profit was 248.532 + 197.426 + 332.878 + 247.609 = $1,026 Mil.
Total Current Assets was $1,129 Mil.
Total Assets was $1,681 Mil.
Property, Plant and Equipment(Net PPE) was $341 Mil.
Depreciation, Depletion and Amortization(DDA) was $90 Mil.
Selling, General & Admin. Expense(SGA) was $768 Mil.
Total Current Liabilities was $373 Mil.
Long-Term Debt was $7 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)|
|=||(233.906 / 2512.972)||/||(271.826 / 2631.872)|
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)|
|=||(176.231 / 2631.872)||/||(216.777 / 2512.972)|
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 - (1202.306 + 309.155) / 1740.419)||/||(1 - (1129.095 + 341.378) / 1681.003)|
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))|
|=||(90.49 / (90.49 + 341.378))||/||(86.715 / (86.715 + 309.155))|
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)|
|=||(740.845 / 2512.972)||/||(767.791 / 2631.872)|
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)|
|=||((6.735 + 360.166) / 1740.419)||/||((7.21 + 372.607) / 1681.003)|
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|
|=||(123.505 - 8.609||-||256.138)||/||1740.419|
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.
Guess? Inc has a M-score of -2.92 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
Guess? Inc Annual Data
Guess? Inc Quarterly Data