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JC Penney Co Inc (NYSE:JCP)
Beneish M-Score
-2.94 (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 -2.94 suggests that the company is not a manipulator.

JCP' s Beneish M-Score Range Over the Past 10 Years
Min: -3.79   Max: -1.8
Current: -2.94

-3.79
-1.8

During the past 13 years, the highest Beneish M-Score of JC Penney Co Inc was -1.80. The lowest was -3.79. And the median was -2.86.


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 * 0.9644+0.404 * 0.7998+0.892 * 1.03+0.115 * 0.9628
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9689+4.679 * -0.0791-0.327 * 1.0431
=-2.94

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

This Year (Jan16) TTM:Last Year (Jan15) TTM:
Accounts Receivable was $0 Mil.
Revenue was 3996 + 2897 + 2875 + 2857 = $12,625 Mil.
Gross Profit was 1363 + 1082 + 1065 + 1041 = $4,551 Mil.
Total Current Assets was $4,018 Mil.
Total Assets was $9,442 Mil.
Property, Plant and Equipment(Net PPE) was $4,816 Mil.
Depreciation, Depletion and Amortization(DDA) was $616 Mil.
Selling, General & Admin. Expense(SGA) was $3,937 Mil.
Total Current Liabilities was $2,412 Mil.
Long-Term Debt was $4,678 Mil.
Net Income was -71 + -137 + -138 + -167 = $-513 Mil.
Non Operating Income was -10 + 0 + 0 + -196 = $-206 Mil.
Cash Flow from Operations was 856 + -232 + 42 + -226 = $440 Mil.
Accounts Receivable was $0 Mil.
Revenue was 3893 + 2764 + 2799 + 2801 = $12,257 Mil.
Gross Profit was 1314 + 1013 + 1008 + 926 = $4,261 Mil.
Total Current Assets was $4,331 Mil.
Total Assets was $10,309 Mil.
Property, Plant and Equipment(Net PPE) was $5,148 Mil.
Depreciation, Depletion and Amortization(DDA) was $631 Mil.
Selling, General & Admin. Expense(SGA) was $3,945 Mil.
Total Current Liabilities was $2,156 Mil.
Long-Term Debt was $5,265 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 / 12625) / (0 / 12257)
=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)
=(1082 / 12257) / (1363 / 12625)
=0.34763808 / 0.36047525
=0.9644

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 - (4018 + 4816) / 9442) / (1 - (4331 + 5148) / 10309)
=0.06439314 / 0.08051217
=0.7998

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
=12625 / 12257
=1.03

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))
=(631 / (631 + 5148)) / (616 / (616 + 4816))
=0.10918844 / 0.11340206
=0.9628

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)
=(3937 / 12625) / (3945 / 12257)
=0.31184158 / 0.3218569
=0.9689

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)
=((4678 + 2412) / 9442) / ((5265 + 2156) / 10309)
=0.75090023 / 0.71985644
=1.0431

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
=(-513 - -206 - 440) / 9442
=-0.0791

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 -2.94 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

Oct13Jan14Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16
DSRI 0011111111
GMI 1.17751.06340.98750.91190.8440.8470.84380.87950.92080.9644
AQI 0.93261.50081.69871.71331.80660.70430.74190.71420.72850.7998
SGI 0.82340.91330.96451.00431.01551.03361.0241.01871.0311.03
DEPI 0.92150.95310.87340.84260.88050.88490.91960.95620.9570.9628
SGAI 1.1560.91780.86630.82050.81780.93710.96160.97680.97050.9689
LVGI 1.32981.16241.04720.92770.99621.09661.0991.10321.08931.0431
TATA -0.0260.05510.0318-0.0169-0.0242-0.0706-0.0572-0.0447-0.05-0.0791
M-score -3.76-3.03-2.09-2.28-2.32-3.01-2.95-2.89-2.87-2.94
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