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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.
During the past 13 years, the highest Beneish M-Score of J&J Snack Foods Corp was -2.35. The lowest was -3.23. And the median was -2.76.
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&J Snack Foods Corp 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 * 1.0636||+||0.528 * 0.9836||+||0.404 * 1.0384||+||0.892 * 1.0556||+||0.115 * 0.972|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.034||+||4.679 * -0.049||-||0.327 * 0.9845|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $83.8 Mil.|
Revenue was 212.752 + 253.494 + 257.113 + 205.321 = $928.7 Mil.
Gross Profit was 61.101 + 82.19 + 84.368 + 61.113 = $288.8 Mil.
Total Current Assets was $275.3 Mil.
Total Assets was $702.9 Mil.
Property, Plant and Equipment(Net PPE) was $159.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $37.6 Mil.
Selling, General & Admin. Expense(SGA) was $183.3 Mil.
Total Current Liabilities was $93.5 Mil.
Long-Term Debt was $0.3 Mil.
Net Income was 11.256 + 22.189 + 23.678 + 13.521 = $70.6 Mil.
Non Operating Income was 1.354 + 1.2 + 1.159 + 0.976 = $4.7 Mil.
Cash Flow from Operations was 25.112 + 37.407 + 30.048 + 7.809 = $100.4 Mil.
|Accounts Receivable was $74.6 Mil.
Revenue was 203.523 + 237.913 + 237.036 + 201.326 = $879.8 Mil.
Gross Profit was 59.906 + 75.694 + 75.322 + 58.151 = $269.1 Mil.
Total Current Assets was $265.3 Mil.
Total Assets was $659.1 Mil.
Property, Plant and Equipment(Net PPE) was $152.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $34.5 Mil.
Selling, General & Admin. Expense(SGA) was $168.0 Mil.
Total Current Liabilities was $88.9 Mil.
Long-Term Debt was $0.5 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(83.777 / 928.68)||/||(74.62 / 879.798)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(82.19 / 879.798)||/||(61.101 / 928.68)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (275.336 + 159.891) / 702.864)||/||(1 - (265.348 + 152.085) / 659.137)|
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.
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))|
|=||(34.505 / (34.505 + 152.085))||/||(37.568 / (37.568 + 159.891))|
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)|
|=||(183.327 / 928.68)||/||(167.96 / 879.798)|
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)|
|=||((0.348 + 93.482) / 702.864)||/||((0.458 + 88.918) / 659.137)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(70.644 - 4.689||-||100.376)||/||702.864|
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&J Snack Foods Corp has a M-score of -2.60 suggests that the company will not be a manipulator.
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
J&J Snack Foods Corp Annual Data
J&J Snack Foods Corp Quarterly Data