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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 -2.84.
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 * 0.7752||+||0.528 * 1.0399||+||0.404 * 1.099||+||0.892 * 0.9334||+||0.115 * 0.8608|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0559||+||4.679 * -0.0546||-||0.327 * 0.9674|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Apr15) TTM:||Last Year (Apr14) TTM:|
|Accounts Receivable was $173 Mil.|
Revenue was 478.824 + 696.727 + 589.834 + 608.571 = $2,374 Mil.
Gross Profit was 165.485 + 260.919 + 213.958 + 216.777 = $857 Mil.
Total Current Assets was $1,073 Mil.
Total Assets was $1,555 Mil.
Property, Plant and Equipment(Net PPE) was $250 Mil.
Depreciation, Depletion and Amortization(DDA) was $82 Mil.
Selling, General & Admin. Expense(SGA) was $725 Mil.
Total Current Liabilities was $285 Mil.
Long-Term Debt was $2 Mil.
Net Income was 3.341 + 53.929 + 20.788 + 21.954 = $100 Mil.
Non Operating Income was 2.626 + 6.897 + 7.484 + 4.766 = $22 Mil.
Cash Flow from Operations was 9.135 + 158.71 + -35.247 + 30.596 = $163 Mil.
|Accounts Receivable was $240 Mil.
Revenue was 522.541 + 768.363 + 613.497 + 639.012 = $2,543 Mil.
Gross Profit was 176.231 + 301.949 + 228.227 + 248.532 = $955 Mil.
Total Current Assets was $1,158 Mil.
Total Assets was $1,714 Mil.
Property, Plant and Equipment(Net PPE) was $323 Mil.
Depreciation, Depletion and Amortization(DDA) was $87 Mil.
Selling, General & Admin. Expense(SGA) was $736 Mil.
Total Current Liabilities was $320 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)|
|=||(173.478 / 2373.956)||/||(239.769 / 2543.413)|
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)|
|=||(260.919 / 2543.413)||/||(165.485 / 2373.956)|
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 - (1073.098 + 249.784) / 1555.239)||/||(1 - (1157.844 + 322.936) / 1713.751)|
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))|
|=||(87.257 / (87.257 + 322.936))||/||(81.994 / (81.994 + 249.784))|
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)|
|=||(724.897 / 2373.956)||/||(735.549 / 2543.413)|
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)|
|=||((2.335 + 284.544) / 1555.239)||/||((6.912 + 319.85) / 1713.751)|
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|
|=||(100.012 - 21.773||-||163.194)||/||1555.239|
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 -2.96 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