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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 -0.78. The lowest was -3.90. And the median was -2.78.
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 * 1.2644||+||0.528 * 1.0478||+||0.404 * 1.0753||+||0.892 * 0.94||+||0.115 * 1.2244|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0021||+||4.679 * -0.041||-||0.327 * 1.119|
|This Year (Jul16) TTM:||Last Year (Jul15) TTM:|
|Accounts Receivable was $213 Mil.|
Revenue was 544.959 + 448.815 + 658.259 + 520.964 = $2,173 Mil.
Gross Profit was 185.632 + 142.759 + 240.164 + 183.664 = $752 Mil.
Total Current Assets was $1,052 Mil.
Total Assets was $1,575 Mil.
Property, Plant and Equipment(Net PPE) was $272 Mil.
Depreciation, Depletion and Amortization(DDA) was $68 Mil.
Selling, General & Admin. Expense(SGA) was $669 Mil.
Total Current Liabilities was $338 Mil.
Long-Term Debt was $24 Mil.
Net Income was 32.269 + -25.178 + 47.777 + 12.444 = $67 Mil.
Non Operating Income was 27.39 + -1.098 + 0.256 + 0.247 = $27 Mil.
Cash Flow from Operations was 13.236 + -30.844 + 114.702 + 7.991 = $105 Mil.
|Accounts Receivable was $180 Mil.
Revenue was 546.264 + 478.824 + 696.727 + 589.834 = $2,312 Mil.
Gross Profit was 198.117 + 165.485 + 260.919 + 213.958 = $838 Mil.
Total Current Assets was $1,090 Mil.
Total Assets was $1,564 Mil.
Property, Plant and Equipment(Net PPE) was $242 Mil.
Depreciation, Depletion and Amortization(DDA) was $79 Mil.
Selling, General & Admin. Expense(SGA) was $710 Mil.
Total Current Liabilities was $319 Mil.
Long-Term Debt was $2 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)|
|=||(213.348 / 2172.997)||/||(179.501 / 2311.649)|
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)|
|=||(838.479 / 2311.649)||/||(752.219 / 2172.997)|
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 - (1052.338 + 271.512) / 1575.016)||/||(1 - (1090.154 + 241.579) / 1563.612)|
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))|
|=||(78.849 / (78.849 + 241.579))||/||(68.29 / (68.29 + 271.512))|
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)|
|=||(668.741 / 2172.997)||/||(709.894 / 2311.649)|
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)|
|=||((23.639 + 338.476) / 1575.016)||/||((2.057 + 319.216) / 1563.612)|
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|
|=||(67.312 - 26.795||-||105.085)||/||1575.016|
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 -2.44 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