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JC Penney Co Inc (NYSE:JCP)
Beneish M-Score
-2.97 (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 -2.97 suggests that the company is not a manipulator.

JCP' s 10-Year Beneish M-Score Range
Min: -4.22   Max: -1.29
Current: -2.97

-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 -2.71.


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 * 0.8438+0.404 * 0.7419+0.892 * 1.024+0.115 * 0.9196
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9331+4.679 * -0.0625-0.327 * 1.099
=-2.97

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

This Year (Apr15) TTM:Last Year (Apr14) TTM:
Accounts Receivable was $0 Mil.
Revenue was 2857 + 3893 + 2764 + 2799 = $12,313 Mil.
Gross Profit was 1041 + 1314 + 1013 + 1008 = $4,376 Mil.
Total Current Assets was $4,257 Mil.
Total Assets was $10,239 Mil.
Property, Plant and Equipment(Net PPE) was $5,049 Mil.
Depreciation, Depletion and Amortization(DDA) was $627 Mil.
Selling, General & Admin. Expense(SGA) was $3,964 Mil.
Total Current Liabilities was $2,159 Mil.
Long-Term Debt was $5,337 Mil.
Net Income was -167 + -59 + -188 + -172 = $-586 Mil.
Non Operating Income was -196 + 0 + -34 + 0 = $-230 Mil.
Cash Flow from Operations was -226 + 693 + -320 + 137 = $284 Mil.
Accounts Receivable was $0 Mil.
Revenue was 2801 + 3782 + 2779 + 2663 = $12,025 Mil.
Gross Profit was 926 + 1074 + 819 + 787 = $3,606 Mil.
Total Current Assets was $4,395 Mil.
Total Assets was $11,292 Mil.
Property, Plant and Equipment(Net PPE) was $5,510 Mil.
Depreciation, Depletion and Amortization(DDA) was $623 Mil.
Selling, General & Admin. Expense(SGA) was $4,149 Mil.
Total Current Liabilities was $2,631 Mil.
Long-Term Debt was $4,891 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 / 12313) / (0 / 12025)
=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)
=(1314 / 12025) / (1041 / 12313)
=0.29987526 / 0.35539674
=0.8438

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 - (4257 + 5049) / 10239) / (1 - (4395 + 5510) / 11292)
=0.09112218 / 0.12283032
=0.7419

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
=12313 / 12025
=1.024

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))
=(623 / (623 + 5510)) / (627 / (627 + 5049))
=0.10158161 / 0.11046512
=0.9196

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)
=(3964 / 12313) / (4149 / 12025)
=0.32193617 / 0.34503119
=0.9331

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)
=((5337 + 2159) / 10239) / ((4891 + 2631) / 11292)
=0.73210274 / 0.66613532
=1.099

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
=(-586 - -230 - 284) / 10239
=-0.0625

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 -2.97 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 0.94950.91921.63850.87941.18160.83590.51750.4510.07680
GMI 0.95570.99891.01791.03260.95041.00431.08791.15051.06340.847
AQI 0.98270.91091.23560.19441.28792.43020.92460.74561.50080.7778
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 1.08580.90280.9761.0611.13510.95990.96741.1481.02640.9102
LVGI 1.04061.03020.93211.09660.9470.88711.1181.14661.16241.1129
TATA -0.0295-0.0122-0.0122-0.0487-0.1051-0.014-0.0851-0.09970.0458-0.0938
M-score -2.69-2.58-1.81-3.23-2.77-2.07-3.37-3.77-3.02-4.01

JC Penney Co Inc Quarterly Data

Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15Apr15
DSRI 0.4510.0034000.076801101
GMI 1.15051.19121.18861.17751.06340.98750.91190.8440.8470.8438
AQI 0.74560.64840.82420.93261.50081.69871.82131.92670.77780.7419
SGI 0.75230.75710.7770.82340.91330.96451.00431.01551.03361.024
DEPI 0.98781.0291.02020.92150.95310.87340.84260.88050.88490.9196
SGAI 1.14511.13451.23241.27471.02640.96980.87850.83980.91020.9331
LVGI 1.14661.3231.45531.32981.16241.04720.94181.01091.11291.099
TATA -0.0997-0.095-0.0542-0.0260.04580.0221-0.0266-0.0339-0.0752-0.0625
M-score -3.77-4.22-4.01-3.78-3.02-3.08-2.29-2.32-3.93-2.97
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