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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 -2.74.
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 * 0.967||+||0.528 * 1.0148||+||0.404 * 0.8453||+||0.892 * 1.0618||+||0.115 * 1.0576|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9962||+||4.679 * -0.0488||-||0.327 * 0.9681|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $102.6 Mil.|
Revenue was 259.772 + 278.724 + 225.008 + 212.752 = $976.3 Mil.
Gross Profit was 82.443 + 90.396 + 66.95 + 61.101 = $300.9 Mil.
Total Current Assets was $326.8 Mil.
Total Assets was $742.9 Mil.
Property, Plant and Equipment(Net PPE) was $174.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $38.3 Mil.
Selling, General & Admin. Expense(SGA) was $190.3 Mil.
Total Current Liabilities was $97.1 Mil.
Long-Term Debt was $1.2 Mil.
Net Income was 19.828 + 24.462 + 14.637 + 11.256 = $70.2 Mil.
Non Operating Income was -1.422 + -0.053 + 1.278 + 1.354 = $1.2 Mil.
Cash Flow from Operations was 36.667 + 37.378 + 6.116 + 25.112 = $105.3 Mil.
|Accounts Receivable was $100.0 Mil.
Revenue was 253.494 + 257.113 + 205.321 + 203.523 = $919.5 Mil.
Gross Profit was 82.19 + 84.368 + 61.113 + 59.906 = $287.6 Mil.
Total Current Assets was $275.6 Mil.
Total Assets was $704.8 Mil.
Property, Plant and Equipment(Net PPE) was $157.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $37.1 Mil.
Selling, General & Admin. Expense(SGA) was $179.9 Mil.
Total Current Liabilities was $96.0 Mil.
Long-Term Debt was $0.4 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)|
|=||(102.649 / 976.256)||/||(99.972 / 919.451)|
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)|
|=||(90.396 / 919.451)||/||(82.443 / 976.256)|
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 - (326.783 + 174.089) / 742.935)||/||(1 - (275.606 + 157.529) / 704.773)|
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))|
|=||(37.093 / (37.093 + 157.529))||/||(38.271 / (38.271 + 174.089))|
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)|
|=||(190.318 / 976.256)||/||(179.93 / 919.451)|
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)|
|=||((1.196 + 97.116) / 742.935)||/||((0.374 + 95.957) / 704.773)|
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|
|=||(70.183 - 1.157||-||105.273)||/||742.935|
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 -2.72 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