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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.
JC Penney Co Inc has a M-score of -3.16 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of JC Penney Co Inc was -1.29. The lowest was -4.22. And the median was -2.68.
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 JC Penney Co 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||+||0.528 * 0.9875||+||0.404 * 1.6987||+||0.892 * 0.9645||+||0.115 * 0.8734|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9387||+||4.679 * 0.0049||-||0.327 * 1.0583|
|This Year (Apr14) TTM:||Last Year (Apr13) TTM:|
|Accounts Receivable was $0 Mil.|
Revenue was 2801 + 3782 + 2779 + 2663 = $12,025 Mil.
Gross Profit was 926 + 1074 + 819 + 787 = $3,606 Mil.
Total Current Assets was $4,395 Mil.
Total Assets was $11,292 Mil.
Property, Plant and Equipment(Net PPE) was $5,510 Mil.
Depreciation, Depletion and Amortization(DDA) was $623 Mil.
Selling, General & Admin. Expense(SGA) was $4,016 Mil.
Total Current Liabilities was $2,711 Mil.
Long-Term Debt was $4,891 Mil.
Net Income was -352 + 35 + -489 + -586 = $-1,392 Mil.
Non Operating Income was 0 + 0 + 0 + -114 = $-114 Mil.
Cash Flow from Operations was -271 + 383 + -737 + -708 = $-1,333 Mil.
|Accounts Receivable was $1 Mil.
Revenue was 2635 + 3884 + 2927 + 3022 = $12,468 Mil.
Gross Profit was 812 + 924 + 952 + 1004 = $3,692 Mil.
Total Current Assets was $3,932 Mil.
Total Assets was $10,372 Mil.
Property, Plant and Equipment(Net PPE) was $5,690 Mil.
Depreciation, Depletion and Amortization(DDA) was $554 Mil.
Selling, General & Admin. Expense(SGA) was $4,436 Mil.
Total Current Liabilities was $3,648 Mil.
Long-Term Debt was $2,950 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)|
|=||(0 / 12025)||/||(1 / 12468)|
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)|
|=||(1074 / 12468)||/||(926 / 12025)|
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 - (4395 + 5510) / 11292)||/||(1 - (3932 + 5690) / 10372)|
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))|
|=||(554 / (554 + 5690))||/||(623 / (623 + 5510))|
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)|
|=||(4016 / 12025)||/||(4436 / 12468)|
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)|
|=||((4891 + 2711) / 11292)||/||((2950 + 3648) / 10372)|
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|
|=||(-1392 - -114||-||-1333)||/||11292|
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.
JC Penney Co Inc has a M-score of -3.16 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
JC Penney Co Inc Annual Data
JC Penney Co Inc Quarterly Data