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JC Penney Co Inc (NYSE:JCP)
Beneish M-Score
-2.93 (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 -2.93 suggests that the company is not a manipulator.

JCP' s Beneish M-Score Range Over the Past 10 Years
Min: -4.24   Max: -1.03
Current: -2.93

-4.24
-1.03

During the past 13 years, the highest Beneish M-Score of JC Penney Co Inc was -1.03. The lowest was -4.24. And the median was -2.73.


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 * 0.9933+0.404 * 0.7653+0.892 * 1.0188+0.115 * 0.9514
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9702+4.679 * -0.0772-0.327 * 1.0207
=-2.93

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

This Year (Jul16) TTM:Last Year (Jul15) TTM:
Accounts Receivable was $0 Mil.
Revenue was 2918 + 2811 + 3996 + 2897 = $12,622 Mil.
Gross Profit was 1084 + 1018 + 1363 + 1082 = $4,547 Mil.
Total Current Assets was $3,876 Mil.
Total Assets was $9,166 Mil.
Property, Plant and Equipment(Net PPE) was $4,686 Mil.
Depreciation, Depletion and Amortization(DDA) was $616 Mil.
Selling, General & Admin. Expense(SGA) was $3,775 Mil.
Total Current Liabilities was $2,574 Mil.
Long-Term Debt was $4,366 Mil.
Net Income was -56 + -68 + -71 + -137 = $-332 Mil.
Non Operating Income was -34 + 4 + -10 + 0 = $-40 Mil.
Cash Flow from Operations was 186 + -394 + 856 + -232 = $416 Mil.
Accounts Receivable was $0 Mil.
Revenue was 2875 + 2857 + 3893 + 2764 = $12,389 Mil.
Gross Profit was 1065 + 1041 + 1314 + 1013 = $4,433 Mil.
Total Current Assets was $4,362 Mil.
Total Assets was $10,232 Mil.
Property, Plant and Equipment(Net PPE) was $4,989 Mil.
Depreciation, Depletion and Amortization(DDA) was $620 Mil.
Selling, General & Admin. Expense(SGA) was $3,819 Mil.
Total Current Liabilities was $2,347 Mil.
Long-Term Debt was $5,243 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 / 12622) / (0 / 12389)
=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)
=(4433 / 12389) / (4547 / 12622)
=0.35781742 / 0.36024402
=0.9933

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 - (3876 + 4686) / 9166) / (1 - (4362 + 4989) / 10232)
=0.0658957 / 0.08610242
=0.7653

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
=12622 / 12389
=1.0188

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))
=(620 / (620 + 4989)) / (616 / (616 + 4686))
=0.11053664 / 0.11618257
=0.9514

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)
=(3775 / 12622) / (3819 / 12389)
=0.29908097 / 0.30825733
=0.9702

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)
=((4366 + 2574) / 9166) / ((5243 + 2347) / 10232)
=0.75714597 / 0.74179046
=1.0207

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
=(-332 - -40 - 416) / 9166
=-0.0772

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 -2.93 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

Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15Jan16
DSRI 0.91921.63850.87941.18160.83590.51750.451011
GMI 0.99891.01791.03260.95041.00431.08791.15051.06340.8470.9644
AQI 0.91091.23560.19441.28792.46910.910.74561.50080.70430.7998
SGI 1.05970.99780.93080.94971.01160.97190.75230.91331.03361.03
DEPI 1.05631.08050.98440.95010.95050.97820.98780.95310.88490.9628
SGAI 0.90280.9761.0611.13410.96550.95871.23490.91780.93710.9689
LVGI 1.03020.93211.09660.9470.88541.12021.14661.16241.09661.0431
TATA -0.0093-0.009-0.0485-0.1051-0.014-0.0851-0.09970.0551-0.0894-0.0999
M-score -2.57-1.80-3.23-2.77-2.05-3.37-3.79-3.03-3.10-3.03

JC Penney Co Inc Quarterly Data

Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16
DSRI 1111111111
GMI 0.98750.91190.8440.8470.84380.87950.92080.96440.98730.9933
AQI 1.69871.71331.80660.70430.6770.71420.72850.79980.78140.7653
SGI 0.96451.00431.01551.03361.0241.01871.0311.031.02161.0188
DEPI 0.87340.84260.88050.88490.91960.95620.9570.96280.95960.9514
SGAI 0.86630.82050.81780.93710.95910.96690.96060.95930.9550.9702
LVGI 1.04720.92770.99621.09661.09551.10321.08931.04311.0291.0207
TATA 0.0318-0.0169-0.0242-0.0706-0.0754-0.0601-0.065-0.0958-0.0722-0.0772
M-score -2.09-2.28-2.32-3.01-3.06-2.96-2.94-3.01-2.90-2.93
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