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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 13 years, the highest Beneish M-Score of Guess? Inc was -1.05. The lowest was -3.22. And the median was -2.75.
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 * 1.065||+||0.528 * 1.0049||+||0.404 * 1.0306||+||0.892 * 0.9117||+||0.115 * 1.1386|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9846||+||4.679 * -0.0679||-||0.327 * 1.1125|
|This Year (Jan16) TTM:||Last Year (Jan15) TTM:|
|Accounts Receivable was $223 Mil.|
Revenue was 658.259 + 520.964 + 546.264 + 478.824 = $2,204 Mil.
Gross Profit was 240.164 + 183.664 + 198.117 + 165.485 = $787 Mil.
Total Current Assets was $1,036 Mil.
Total Assets was $1,539 Mil.
Property, Plant and Equipment(Net PPE) was $255 Mil.
Depreciation, Depletion and Amortization(DDA) was $71 Mil.
Selling, General & Admin. Expense(SGA) was $666 Mil.
Total Current Liabilities was $327 Mil.
Long-Term Debt was $2 Mil.
Net Income was 47.777 + 12.444 + 18.289 + 3.341 = $82 Mil.
Non Operating Income was 0.256 + 0.247 + 3.708 + 2.626 = $7 Mil.
Cash Flow from Operations was 114.702 + 7.991 + 47.601 + 9.135 = $179 Mil.
|Accounts Receivable was $230 Mil.
Revenue was 696.727 + 589.834 + 608.571 + 522.541 = $2,418 Mil.
Gross Profit was 260.919 + 213.958 + 216.777 + 176.231 = $868 Mil.
Total Current Assets was $1,092 Mil.
Total Assets was $1,601 Mil.
Property, Plant and Equipment(Net PPE) was $260 Mil.
Depreciation, Depletion and Amortization(DDA) was $85 Mil.
Selling, General & Admin. Expense(SGA) was $742 Mil.
Total Current Liabilities was $302 Mil.
Long-Term Debt was $6 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)|
|=||(222.972 / 2204.311)||/||(229.618 / 2417.673)|
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)|
|=||(183.664 / 2417.673)||/||(240.164 / 2204.311)|
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 - (1036.252 + 255.344) / 1538.748)||/||(1 - (1092.299 + 259.524) / 1601.405)|
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))|
|=||(85.06 / (85.06 + 259.524))||/||(70.684 / (70.684 + 255.344))|
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)|
|=||(666.08 / 2204.311)||/||(741.973 / 2417.673)|
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)|
|=||((2.318 + 327.059) / 1538.748)||/||((6.165 + 301.966) / 1601.405)|
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|
|=||(81.851 - 6.837||-||179.429)||/||1538.748|
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 -2.82 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