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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 -2.75.
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 * 1.036||+||0.528 * 1.0101||+||0.404 * 0.9198||+||0.892 * 1.0621||+||0.115 * 1.0636|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9811||+||4.679 * -0.0429||-||0.327 * 0.9629|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|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.
Net Income was 12.479 + 19.828 + 24.462 + 14.637 = $71.4 Mil.
Non Operating Income was 1.16 + -1.422 + -0.053 + 1.278 = $1.0 Mil.
Cash Flow from Operations was 20.918 + 36.667 + 37.378 + 7.297 = $102.3 Mil.
|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.
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)|
|=||(92.18 / 986.354)||/||(83.777 / 928.68)|
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)|
|=||(82.443 / 928.68)||/||(63.835 / 986.354)|
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 - (305.253 + 176.646) / 741.638)||/||(1 - (275.336 + 159.891) / 702.864)|
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))|
|=||(37.568 / (37.568 + 159.891))||/||(38.481 / (38.481 + 176.646))|
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)|
|=||(190.986 / 986.354)||/||(183.285 / 928.68)|
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)|
|=||((1.126 + 94.211) / 741.638)||/||((0.348 + 93.482) / 702.864)|
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|
|=||(71.406 - 0.963||-||102.26)||/||741.638|
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