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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 -1.08. The lowest was -4.39. And the median was -2.86.
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 * 0.9457||+||0.528 * 1.0133||+||0.404 * 1.1204||+||0.892 * 0.901||+||0.115 * 0.9695|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0096||+||4.679 * -0.0978||-||0.327 * 1.106|
|This Year (Oct15) TTM:||Last Year (Oct14) TTM:|
|Accounts Receivable was $175 Mil.|
Revenue was 520.964 + 546.264 + 478.824 + 696.727 = $2,243 Mil.
Gross Profit was 183.664 + 198.117 + 165.485 + 260.919 = $808 Mil.
Total Current Assets was $1,050 Mil.
Total Assets was $1,522 Mil.
Property, Plant and Equipment(Net PPE) was $240 Mil.
Depreciation, Depletion and Amortization(DDA) was $75 Mil.
Selling, General & Admin. Expense(SGA) was $684 Mil.
Total Current Liabilities was $327 Mil.
Long-Term Debt was $2 Mil.
Net Income was 12.444 + 18.289 + 3.341 + 53.929 = $88 Mil.
Non Operating Income was 0.247 + 3.708 + 2.626 + 6.897 = $13 Mil.
Cash Flow from Operations was 7.991 + 47.601 + 9.135 + 158.71 = $223 Mil.
|Accounts Receivable was $205 Mil.
Revenue was 589.834 + 608.571 + 522.541 + 768.363 = $2,489 Mil.
Gross Profit was 213.958 + 216.777 + 176.231 + 301.949 = $909 Mil.
Total Current Assets was $1,138 Mil.
Total Assets was $1,654 Mil.
Property, Plant and Equipment(Net PPE) was $290 Mil.
Depreciation, Depletion and Amortization(DDA) was $87 Mil.
Selling, General & Admin. Expense(SGA) was $752 Mil.
Total Current Liabilities was $317 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)|
|=||(174.742 / 2242.779)||/||(205.086 / 2489.309)|
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)|
|=||(198.117 / 2489.309)||/||(183.664 / 2242.779)|
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 - (1050.145 + 240.058) / 1522.472)||/||(1 - (1138.429 + 290.434) / 1654.096)|
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))|
|=||(86.994 / (86.994 + 290.434))||/||(74.871 / (74.871 + 240.058))|
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)|
|=||(683.627 / 2242.779)||/||(751.559 / 2489.309)|
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)|
|=||((2.189 + 327.05) / 1522.472)||/||((6.738 + 316.674) / 1654.096)|
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|
|=||(88.003 - 13.478||-||223.437)||/||1522.472|
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 -3.06 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