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GuruFocus has detected 1 Warning Sign with Jakks Pacific Inc $JAKK.
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Jakks Pacific Inc (NAS:JAKK)
Beneish M-Score
-2.64 (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.

Jakks Pacific Inc has a M-score of -2.64 suggests that the company is not a manipulator.

JAKK' s Beneish M-Score Range Over the Past 10 Years
Min: -6.32   Max: -0.88
Current: -2.64

-6.32
-0.88

During the past 13 years, the highest Beneish M-Score of Jakks Pacific Inc was -0.88. The lowest was -6.32. And the median was -2.64.


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 Jakks Pacific 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 * 1.1214+0.528 * 0.9711+0.404 * 0.9592+0.892 * 0.9475+0.115 * 1.0091
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0974+4.679 * -0.0359-0.327 * 1.0225
=-2.64

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

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $173.6 Mil.
Revenue was 167.026 + 302.791 + 140.977 + 95.809 = $706.6 Mil.
Gross Profit was 52.105 + 94.933 + 44.8 + 31.183 = $223.0 Mil.
Total Current Assets was $353.4 Mil.
Total Assets was $464.3 Mil.
Property, Plant and Equipment(Net PPE) was $22.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $22.9 Mil.
Selling, General & Admin. Expense(SGA) was $205.9 Mil.
Total Current Liabilities was $116.8 Mil.
Long-Term Debt was $203.0 Mil.
Net Income was -7.585 + 30.612 + -4.369 + -17.415 = $1.2 Mil.
Non Operating Income was 0.051 + 0.207 + 0.861 + 0.075 = $1.2 Mil.
Cash Flow from Operations was 37.385 + -43.104 + -10.167 + 32.609 = $16.7 Mil.
Accounts Receivable was $163.4 Mil.
Revenue was 163.407 + 337.027 + 131.106 + 114.201 = $745.7 Mil.
Gross Profit was 49.575 + 104.329 + 39.287 + 35.378 = $228.6 Mil.
Total Current Assets was $382.4 Mil.
Total Assets was $499.6 Mil.
Property, Plant and Equipment(Net PPE) was $18.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.9 Mil.
Selling, General & Admin. Expense(SGA) was $198.0 Mil.
Total Current Liabilities was $127.4 Mil.
Long-Term Debt was $209.2 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)
=(173.599 / 706.603) / (163.387 / 745.741)
=0.2456811 / 0.21909349
=1.1214

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)
=(228.569 / 745.741) / (223.021 / 706.603)
=0.30649917 / 0.31562419
=0.9711

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 - (353.379 + 22.841) / 464.303) / (1 - (382.368 + 18.435) / 499.62)
=0.18971017 / 0.19778432
=0.9592

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
=706.603 / 745.741
=0.9475

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))
=(18.86 / (18.86 + 18.435)) / (22.944 / (22.944 + 22.841))
=0.50569781 / 0.50112482
=1.0091

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)
=(205.915 / 706.603) / (198.039 / 745.741)
=0.29141541 / 0.26556003
=1.0974

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)
=((203.007 + 116.81) / 464.303) / ((209.166 + 127.401) / 499.62)
=0.68881097 / 0.67364597
=1.0225

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
=(1.243 - 1.194 - 16.723) / 464.303
=-0.0359

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.

Jakks Pacific Inc has a M-score of -2.64 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.

Jakks Pacific Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.01740.80260.98961.01380.9331.03431.01121.81020.75681.1214
GMI 1.021.0621.40820.77031.14520.96421.20610.84550.94980.9711
AQI 0.94411.15290.32370.99711.00251.45151.0930.76860.98250.9592
SGI 1.11981.0540.88960.92980.9070.98380.94931.27990.92060.9475
DEPI 1.09581.12810.78171.00091.02061.01130.88341.09221.24771.0091
SGAI 0.95551.05671.05760.92261.0911.11380.99930.79761.0521.0974
LVGI 0.89330.90121.55650.88421.03271.62131.11651.14330.93131.0225
TATA -0.0202-0.0018-0.7383-0.0416-0.0679-0.2381-0.07630.1678-0.102-0.0359
M-score -2.41-2.49-6.32-2.80-2.89-3.63-2.78-0.88-3.24-2.64

Jakks Pacific Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.06911.81021.20840.82730.79820.75680.94821.30591.1061.1214
GMI 0.83680.84550.83170.99580.90810.94980.95370.94130.98620.9711
AQI 0.79640.76860.82130.94670.96740.98250.94760.93490.96450.9592
SGI 1.10351.27991.32071.29511.20550.92060.86410.86870.84050.9475
DEPI 0.89531.09221.16751.29861.44911.24771.16921.05290.98241.0091
SGAI 0.81620.79760.81260.84440.95011.0521.14541.16151.15571.0974
LVGI 1.15241.14331.09180.91860.94340.93130.98621.02041.01711.0225
TATA 0.04310.16780.11370.0433-0.011-0.102-0.127-0.0658-0.0695-0.0359
M-score -2.32-0.88-1.61-2.11-2.52-3.24-3.29-2.71-2.91-2.64
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