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J.C. Penney Co Inc (NYSE:JCP)
Beneish M-Score
-3.01 (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.

J.C. Penney Co Inc has a M-score of -3.01 suggests that the company is not a manipulator.

JCP' s 10-Year Beneish M-Score Range
Min: -3.77   Max: -1.81
Current: -3.01

-3.77
-1.81

During the past 13 years, the highest Beneish M-Score of J.C. Penney Co Inc was -1.81. The lowest was -3.77. And the median was -2.81.


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 J.C. 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 * 0.0768+0.528 * 1.0634+0.404 * 1.5008+0.892 * 0.9133+0.115 * 0.9531
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.989+4.679 * 0.0458-0.327 * 1.1624
=-3.01

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

This Year (Jan14) TTM:Last Year (Jan13) TTM:
Accounts Receivable was $4 Mil.
Revenue was 3782 + 2779 + 2663 + 2635 = $11,859 Mil.
Gross Profit was 1074 + 819 + 787 + 812 = $3,492 Mil.
Total Current Assets was $4,833 Mil.
Total Assets was $11,801 Mil.
Property, Plant and Equipment(Net PPE) was $5,619 Mil.
Depreciation, Depletion and Amortization(DDA) was $601 Mil.
Selling, General & Admin. Expense(SGA) was $4,096 Mil.
Total Current Liabilities was $2,846 Mil.
Long-Term Debt was $4,901 Mil.
Net Income was 35 + -489 + -586 + -348 = $-1,388 Mil.
Non Operating Income was 0 + 0 + -114 + 0 = $-114 Mil.
Cash Flow from Operations was 383 + -737 + -708 + -752 = $-1,814 Mil.
Accounts Receivable was $57 Mil.
Revenue was 3884 + 2927 + 3022 + 3152 = $12,985 Mil.
Gross Profit was 924 + 952 + 1004 + 1186 = $4,066 Mil.
Total Current Assets was $3,683 Mil.
Total Assets was $9,781 Mil.
Property, Plant and Equipment(Net PPE) was $5,353 Mil.
Depreciation, Depletion and Amortization(DDA) was $543 Mil.
Selling, General & Admin. Expense(SGA) was $4,535 Mil.
Total Current Liabilities was $2,568 Mil.
Long-Term Debt was $2,956 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)
=(4 / 11859) / (57 / 12985)
=0.0003373 / 0.00438968
=0.0768

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)
=(819 / 12985) / (1074 / 11859)
=0.31313054 / 0.2944599
=1.0634

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 - (4833 + 5619) / 11801) / (1 - (3683 + 5353) / 9781)
=0.11431235 / 0.07616808
=1.5008

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
=11859 / 12985
=0.9133

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))
=(543 / (543 + 5353)) / (601 / (601 + 5619))
=0.09209634 / 0.09662379
=0.9531

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)
=(4096 / 11859) / (4535 / 12985)
=0.34539169 / 0.34924913
=0.989

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)
=((4901 + 2846) / 11801) / ((2956 + 2568) / 9781)
=0.65646979 / 0.56476843
=1.1624

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
=(-1388 - -114 - -1814) / 11801
=0.0458

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.

J.C. Penney Co Inc has a M-score of -3.01 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.

J.C. Penney Co Inc Annual Data

Jan05Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14
DSRI 1.15580.94950.91921.63850.87941.18160.83590.51750.4510.0768
GMI 0.99170.95570.99891.01791.03260.95041.00431.08791.15051.0634
AQI 0.36330.98270.91091.23560.19441.28792.43020.92460.74561.5008
SGI 1.01741.03791.05970.99780.93080.94971.01160.97190.75230.9133
DEPI 1.10451.01071.05631.08050.98440.95010.95050.97820.98780.9531
SGAI 0.86761.08580.90280.9761.0611.13510.95990.96741.1480.989
LVGI 0.98761.04061.03020.93211.09660.9470.88711.1181.14661.1624
TATA 0.0192-0.0295-0.0122-0.0122-0.0487-0.1051-0.014-0.0851-0.09970.0458
M-score -2.45-2.69-2.58-1.81-3.23-2.77-2.07-3.37-3.77-3.01

J.C. Penney Co Inc Quarterly Data

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
DSRI 0.78750.51751.54860.71230.22890.4510.0034000.0768
GMI 1.02771.08791.10471.13531.16541.15051.19121.18861.17751.0634
AQI 1.3560.92460.91080.68850.64190.74560.64840.82420.93261.5008
SGI 0.99610.97190.92660.87850.82830.75230.75710.7770.82340.9133
DEPI 0.98380.97820.98080.98711.03260.98781.0291.02020.92150.9531
SGAI 0.95110.96511.00030.99331.00051.14931.1331.2131.24970.989
LVGI 1.01791.1181.03141.05531.05631.14661.3231.45531.32981.1624
TATA -0.0605-0.0851-0.0516-0.0537-0.0751-0.0997-0.095-0.0542-0.0260.0458
M-score -2.80-3.37-2.28-3.18-3.77-3.77-4.22-4.01-3.77-3.01
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