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JC Penney Co Inc (NYSE:JCP)
Beneish M-Score
-2.40 (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 -2.40 suggests that the company is not a manipulator.

JCP' s 10-Year Beneish M-Score Range
Min: -4.22   Max: -1.29
Current: -2.4

-4.22
-1.29

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 -2.67.


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 * 0.844+0.404 * 1.9267+0.892 * 1.0155+0.115 * 0.8805
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8073+4.679 * -0.0512-0.327 * 1.0109
=-2.40

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

This Year (Oct14) TTM:Last Year (Oct13) TTM:
Accounts Receivable was $0 Mil.
Revenue was 2764 + 2799 + 2801 + 3782 = $12,146 Mil.
Gross Profit was 1013 + 1008 + 926 + 1074 = $4,021 Mil.
Total Current Assets was $4,440 Mil.
Total Assets was $11,165 Mil.
Property, Plant and Equipment(Net PPE) was $5,312 Mil.
Depreciation, Depletion and Amortization(DDA) was $635 Mil.
Selling, General & Admin. Expense(SGA) was $3,849 Mil.
Total Current Liabilities was $2,510 Mil.
Long-Term Debt was $5,369 Mil.
Net Income was -188 + -172 + -352 + 35 = $-677 Mil.
Non Operating Income was -34 + 0 + 0 + 0 = $-34 Mil.
Cash Flow from Operations was -320 + 137 + -271 + 383 = $-71 Mil.
Accounts Receivable was $0 Mil.
Revenue was 2779 + 2663 + 2635 + 3884 = $11,961 Mil.
Gross Profit was 819 + 787 + 812 + 924 = $3,342 Mil.
Total Current Assets was $5,342 Mil.
Total Assets was $11,875 Mil.
Property, Plant and Equipment(Net PPE) was $5,753 Mil.
Depreciation, Depletion and Amortization(DDA) was $597 Mil.
Selling, General & Admin. Expense(SGA) was $4,695 Mil.
Total Current Liabilities was $3,378 Mil.
Long-Term Debt was $4,912 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 / 12146) / (0 / 11961)
=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)
=(1008 / 11961) / (1013 / 12146)
=0.27940808 / 0.33105549
=0.844

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 - (4440 + 5312) / 11165) / (1 - (5342 + 5753) / 11875)
=0.1265562 / 0.06568421
=1.9267

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
=12146 / 11961
=1.0155

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))
=(597 / (597 + 5753)) / (635 / (635 + 5312))
=0.09401575 / 0.10677653
=0.8805

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)
=(3849 / 12146) / (4695 / 11961)
=0.31689445 / 0.39252571
=0.8073

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)
=((5369 + 2510) / 11165) / ((4912 + 3378) / 11875)
=0.70568742 / 0.69810526
=1.0109

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
=(-677 - -34 - -71) / 11165
=-0.0512

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 -2.40 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

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

JC Penney Co Inc Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
DSRI 0.71230.4760.4510.0034000.0768011
GMI 1.13531.16541.15051.19121.18861.17751.06340.98750.91190.844
AQI 0.68850.61250.74560.64840.82420.93261.50081.69871.82131.9267
SGI 0.87850.82830.75230.75710.7770.82340.91330.96451.00431.0155
DEPI 0.98711.03260.98781.0291.02020.92150.95310.87340.84260.8805
SGAI 0.99731.00681.14511.13451.23241.27470.9890.93350.84490.8073
LVGI 1.05531.06261.14661.3231.45531.32981.16241.05830.94181.0109
TATA -0.0537-0.0751-0.0997-0.095-0.0542-0.0260.04580.0049-0.0441-0.0512
M-score -3.18-3.55-3.77-4.22-4.01-3.78-3.01-3.16-2.37-2.40
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