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JC Penney Co Inc (NYSE:JCP)
Beneish M-Score
-3.40 (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.

JC Penney Co Inc has a M-score of -3.40 suggests that the company is not a manipulator.

JCP' s 10-Year Beneish M-Score Range
Min: -4.6   Max: 0.47
Current: -3.4

-4.6
0.47

During the past 13 years, the highest Beneish M-Score of JC Penney Co Inc was 0.47. The lowest was -4.60. And the median was -2.62.


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 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 * 1+0.528 * 0.8538+0.404 * 0.7238+0.892 * 1.01+0.115 * 0.9558
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.958+4.679 * -0.1526-0.327 * 1.0852
=-3.40

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jan15) TTM:Last Year (Apr14) TTM:
Accounts Receivable was $0 Mil.
Revenue was 3893 + 0 + 2764 + 2799 = $9,456 Mil.
Gross Profit was 1314 + 0 + 1013 + 1008 = $3,335 Mil.
Total Current Assets was $4,331 Mil.
Total Assets was $10,404 Mil.
Property, Plant and Equipment(Net PPE) was $5,148 Mil.
Depreciation, Depletion and Amortization(DDA) was $630 Mil.
Selling, General & Admin. Expense(SGA) was $2,989 Mil.
Total Current Liabilities was $2,241 Mil.
Long-Term Debt was $5,360 Mil.
Net Income was -59 + 0 + -188 + -172 = $-419 Mil.
Non Operating Income was 0 + 0 + -34 + 0 = $-34 Mil.
Cash Flow from Operations was 693 + 693 + -320 + 137 = $1,203 Mil.
Accounts Receivable was $0 Mil.
Revenue was 2801 + 3782 + 0 + 2779 = $9,362 Mil.
Gross Profit was 926 + 1074 + 0 + 819 = $2,819 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 $641 Mil.
Selling, General & Admin. Expense(SGA) was $3,089 Mil.
Total Current Liabilities was $2,711 Mil.
Long-Term Debt was $4,891 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)
=(0 / 9456) / (0 / 9362)
=0 / 0
=1

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)
=(0 / 9362) / (1314 / 9456)
=0.30111087 / 0.35268613
=0.8538

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 - (4331 + 5148) / 10404) / (1 - (4395 + 5510) / 11292)
=0.08890811 / 0.12283032
=0.7238

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
=9456 / 9362
=1.01

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))
=(641 / (641 + 5510)) / (630 / (630 + 5148))
=0.1042107 / 0.10903427
=0.9558

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)
=(2989 / 9456) / (3089 / 9362)
=0.3160956 / 0.32995087
=0.958

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)
=((5360 + 2241) / 10404) / ((4891 + 2711) / 11292)
=0.73058439 / 0.67321998
=1.0852

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
=(-419 - -34 - 1203) / 10404
=-0.1526

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 -3.40 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 own currency.

JC Penney Co Inc Annual Data

Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15
DSRI 0.94950.91921.63850.87941.18160.83590.51750.4510.07680
GMI 0.95570.99891.01791.03260.95041.00431.08791.15051.06340.847
AQI 0.98270.91091.23560.19441.28792.43020.92460.74561.50080.7778
SGI 1.03791.05970.99780.93080.94971.01160.97190.75230.91331.0336
DEPI 1.01071.05631.08050.98440.95010.95050.97820.98780.95310.8849
SGAI 1.08580.90280.9761.0611.13510.95990.96741.1481.02640.9102
LVGI 1.04061.03020.93211.09660.9470.88711.1181.14661.16241.1129
TATA -0.0295-0.0122-0.0122-0.0487-0.1051-0.014-0.0851-0.09970.0458-0.0938
M-score -2.69-2.58-1.81-3.23-2.77-2.07-3.37-3.77-3.02-4.01

JC Penney Co Inc Quarterly Data

Jul13Oct13Dec13Jan14Apr14Jul14Oct14Dec14Jan15Apr15
DSRI 014.096311111
GMI 1.19731.23560.97940.91250.87150.90430.85380.9057
AQI 0.9990.93261.58091.74571.9511.92670.72380.7111
SGI 0.63211.31430.97651.01960.78441.50381.011.0141
DEPI 0.936910.63650.92720.88730.88959.36540.95580.9609
SGAI 1.29271.17050.90910.82890.81870.8290.9580.9806
LVGI 1.38071.32981.0320.92880.97781.01091.08521.0725
TATA -0.1031-0.026-0.0209-0.0499-0.1009-0.0512-0.1526-0.1
M-score -4.29-1.250.47-2.40-2.80-0.96-3.40-3.13
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