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JC Penney Co Inc (NYSE:JCP)
Beneish M-Score
-2.84 (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 -2.84 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: -2.84

-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 -2.71.


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 * 0.9537+0.404 * 0.7285+0.892 * 1.0317+0.115 * 0.957
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.931+4.679 * -0.0496-0.327 * 1.0893
=-2.84

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

This Year (Oct15) TTM:Last Year (Oct14) TTM:
Accounts Receivable was $0 Mil.
Revenue was 2897 + 2875 + 2857 + 0 = $8,629 Mil.
Gross Profit was 1082 + 1065 + 1041 + 0 = $3,188 Mil.
Total Current Assets was $4,733 Mil.
Total Assets was $10,550 Mil.
Property, Plant and Equipment(Net PPE) was $4,905 Mil.
Depreciation, Depletion and Amortization(DDA) was $616 Mil.
Selling, General & Admin. Expense(SGA) was $2,848 Mil.
Total Current Liabilities was $2,831 Mil.
Long-Term Debt was $5,161 Mil.
Net Income was -137 + -138 + -167 + 0 = $-442 Mil.
Non Operating Income was 0 + 0 + -196 + 0 = $-196 Mil.
Cash Flow from Operations was -232 + 42 + -226 + 693 = $277 Mil.
Accounts Receivable was $0 Mil.
Revenue was 2764 + 2799 + 2801 + 0 = $8,364 Mil.
Gross Profit was 1013 + 1008 + 926 + 0 = $2,947 Mil.
Total Current Assets was $4,440 Mil.
Total Assets was $11,065 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 $2,965 Mil.
Total Current Liabilities was $2,426 Mil.
Long-Term Debt was $5,269 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 / 8629) / (0 / 8364)
=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)
=(1065 / 8364) / (1082 / 8629)
=0.35234338 / 0.36945185
=0.9537

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 - (4733 + 4905) / 10550) / (1 - (4440 + 5312) / 11065)
=0.0864455 / 0.11866245
=0.7285

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
=8629 / 8364
=1.0317

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))
=(635 / (635 + 5312)) / (616 / (616 + 4905))
=0.10677653 / 0.11157399
=0.957

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)
=(2848 / 8629) / (2965 / 8364)
=0.33004983 / 0.35449546
=0.931

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)
=((5161 + 2831) / 10550) / ((5269 + 2426) / 11065)
=0.75753555 / 0.69543606
=1.0893

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
=(-442 - -196 - 277) / 10550
=-0.0496

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 -2.84 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 0.94950.91921.63850.87941.18160.83590.51750.45101
GMI 0.95570.99891.01791.03260.95041.00431.08791.15051.06340.847
AQI 0.98270.91091.23560.19441.28792.46910.910.74561.50080.7778
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 1.08580.90280.9761.0611.13410.96550.95871.23490.95790.9102
LVGI 1.04061.03020.93211.09660.9470.88541.12021.14661.16241.1129
TATA -0.0295-0.0122-0.0122-0.0485-0.1051-0.014-0.0851-0.09970.0458-0.0938
M-score -2.69-2.58-1.81-3.23-2.77-2.05-3.37-3.79-3.08-3.09

JC Penney Co Inc Quarterly Data

Jul13Oct13Jan14Apr14Jul14Oct14Jan15Apr15Jul15Oct15
DSRI 0001111111
GMI 1.16751.15321.15321.04980.9440.84970.84970.84470.8950.9537
AQI 0.82420.93261.50081.69871.71331.80660.77780.74190.71420.7285
SGI 0.80950.88750.88750.96031.01871.03551.03551.02151.0141.0317
DEPI 1.02020.92150.95310.87340.84260.88050.88490.91960.95620.957
SGAI 1.13611.04481.04480.96450.89440.89140.89140.92230.94110.931
LVGI 1.45531.32981.16241.04720.92770.99621.11291.0991.10321.0893
TATA -0.00690.02050.04280.019-0.03-0.0373-0.0695-0.0567-0.0442-0.0496
M-score -3.75-3.48-3.08-2.14-2.32-2.37-2.97-2.94-2.87-2.84
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