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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 * 0.9928||+||0.528 * 0.9997||+||0.404 * 0.8815||+||0.892 * 1.0093||+||0.115 * 1.0028|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1||+||4.679 * -0.0685||-||0.327 * 0.9908|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $92.4 Mil.|
Revenue was 225.57 + 262.24 + 277.981 + 229.71 = $995.5 Mil.
Gross Profit was 65.895 + 79.797 + 92.086 + 68.749 = $306.5 Mil.
Total Current Assets was $362.9 Mil.
Total Assets was $794.2 Mil.
Property, Plant and Equipment(Net PPE) was $186.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $40.4 Mil.
Selling, General & Admin. Expense(SGA) was $192.8 Mil.
Total Current Liabilities was $100.0 Mil.
Long-Term Debt was $1.2 Mil.
Net Income was 13.54 + 20.618 + 26.791 + 15.588 = $76.5 Mil.
Non Operating Income was 1.227 + 1.014 + 0.981 + 0.977 = $4.2 Mil.
Cash Flow from Operations was 26.4 + 49.877 + 43.047 + 7.383 = $126.7 Mil.
|Accounts Receivable was $92.2 Mil.
Revenue was 222.85 + 259.772 + 278.724 + 225.008 = $986.4 Mil.
Gross Profit was 63.835 + 82.443 + 90.396 + 66.95 = $303.6 Mil.
Total Current Assets was $305.3 Mil.
Total Assets was $741.6 Mil.
Property, Plant and Equipment(Net PPE) was $176.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $38.5 Mil.
Selling, General & Admin. Expense(SGA) was $191.0 Mil.
Total Current Liabilities was $94.2 Mil.
Long-Term Debt was $1.1 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)|
|=||(92.368 / 995.501)||/||(92.18 / 986.354)|
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)|
|=||(303.624 / 986.354)||/||(306.527 / 995.501)|
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 - (362.851 + 186.132) / 794.173)||/||(1 - (305.253 + 176.646) / 741.638)|
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))|
|=||(38.481 / (38.481 + 176.646))||/||(40.409 / (40.409 + 186.132))|
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)|
|=||(192.75 / 995.501)||/||(190.986 / 986.354)|
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)|
|=||((1.151 + 99.995) / 794.173)||/||((1.126 + 94.211) / 741.638)|
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|
|=||(76.537 - 4.199||-||126.707)||/||794.173|
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 -2.84 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