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GuruFocus has detected 7 Warning Signs with Guess? Inc $GES.
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Guess? Inc (NYSE:GES)
Beneish M-Score
-2.33 (As of Today)

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 -2.33 suggests that the company is not a manipulator.

GES' s Beneish M-Score Range Over the Past 10 Years
Min: -3.9   Max: -0.78
Current: -2.33

-3.9
-0.78

During the past 13 years, the highest Beneish M-Score of Guess? Inc was -0.78. The lowest was -3.90. And the median was -2.78.


Definition

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 * 1.3114+0.528 * 1.0531+0.404 * 1.0453+0.892 * 0.9757+0.115 * 1.1938
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.006+4.679 * -0.0295-0.327 * 1.1343
=-2.33

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Oct16) TTM:Last Year (Oct15) TTM:
Accounts Receivable was $224 Mil.
Revenue was 536.321 + 544.959 + 448.815 + 658.259 = $2,188 Mil.
Gross Profit was 180.242 + 185.632 + 142.759 + 240.164 = $749 Mil.
Total Current Assets was $1,055 Mil.
Total Assets was $1,580 Mil.
Property, Plant and Equipment(Net PPE) was $273 Mil.
Depreciation, Depletion and Amortization(DDA) was $68 Mil.
Selling, General & Admin. Expense(SGA) was $671 Mil.
Total Current Liabilities was $364 Mil.
Long-Term Debt was $24 Mil.
Net Income was 9.103 + 32.269 + -25.178 + 47.777 = $64 Mil.
Non Operating Income was 0.125 + 27.39 + -1.098 + 0.256 = $27 Mil.
Cash Flow from Operations was -13.167 + 13.236 + -30.844 + 114.702 = $84 Mil.
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.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(223.597 / 2188.354) / (174.742 / 2242.779)
=0.10217588 / 0.07791316
=1.3114

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(808.185 / 2242.779) / (748.797 / 2188.354)
=0.36034982 / 0.34217362
=1.0531

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (1054.927 + 272.918) / 1579.763) / (1 - (1050.145 + 240.058) / 1522.472)
=0.15946569 / 0.15256044
=1.0453

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=2188.354 / 2242.779
=0.9757

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))
=(74.871 / (74.871 + 240.058)) / (67.865 / (67.865 + 272.918))
=0.2377393 / 0.19914432
=1.1938

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)
=(671.034 / 2188.354) / (683.627 / 2242.779)
=0.30663869 / 0.30481247
=1.006

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)
=((23.54 + 363.976) / 1579.763) / ((2.189 + 327.05) / 1522.472)
=0.24530009 / 0.21625291
=1.1343

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(63.971 - 26.673 - 83.927) / 1579.763
=-0.0295

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 -2.33 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Guess? Inc Annual Data

Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15Jan16
DSRI 1.29150.8621.06371.08110.87920.88970.870.96841.065
GMI 0.96731.02790.99641.01651.01161.07161.05671.05821.0049
AQI 0.87790.88030.94351.2471.02691.1520.86721.22911.0306
SGI 1.47651.19631.01681.16861.08070.9890.96660.94080.9117
DEPI 1.04310.83381.07391.13780.95570.91950.94110.86691.1386
SGAI 1.00250.98530.99831.00341.03631.05580.96731.06420.9846
LVGI 0.93680.83190.8291.12810.88720.9840.93240.89911.1125
TATA 0.0063-0.003-0.0777-0.0435-0.0542-0.056-0.1047-0.0483-0.0679
M-score -1.80-2.44-2.73-2.38-2.73-2.77-3.12-2.66-2.82

Guess? Inc Quarterly Data

Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16
DSRI 0.8480.83260.96840.77520.88650.94571.0651.18811.26441.3114
GMI 1.06161.05411.05821.03991.01281.01331.00491.02661.04781.0531
AQI 1.05041.0991.22911.0991.12731.12041.03061.12641.07531.0453
SGI 0.95480.95140.94080.93340.91990.9010.91170.91590.940.9757
DEPI 0.95660.90670.86690.86080.89020.96951.13861.19871.22441.1938
SGAI 1.01061.0441.06421.05591.04171.00960.98461.011.00211.006
LVGI 0.9330.89660.89910.96740.97471.1061.11251.19741.1191.1343
TATA -0.0812-0.0532-0.0483-0.0546-0.0669-0.0978-0.0679-0.0575-0.041-0.0295
M-score -2.97-2.84-2.66-2.96-2.92-3.06-2.82-2.63-2.44-2.33
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