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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 -2.73.
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 * 1.028||+||0.528 * 1.008||+||0.404 * 0.9404||+||0.892 * 1.045||+||0.115 * 1.0542|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9756||+||4.679 * -0.0448||-||0.327 * 1.0107|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $102.9 Mil.|
Revenue was 229.71 + 222.85 + 259.772 + 278.724 = $991.1 Mil.
Gross Profit was 68.749 + 63.835 + 82.443 + 90.396 = $305.4 Mil.
Total Current Assets was $303.8 Mil.
Total Assets was $745.1 Mil.
Property, Plant and Equipment(Net PPE) was $178.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $39.1 Mil.
Selling, General & Admin. Expense(SGA) was $191.3 Mil.
Total Current Liabilities was $95.7 Mil.
Long-Term Debt was $1.4 Mil.
Net Income was 15.588 + 12.479 + 19.828 + 24.462 = $72.4 Mil.
Non Operating Income was 0.977 + 1.16 + -1.422 + -0.053 = $0.7 Mil.
Cash Flow from Operations was 7.383 + 20.918 + 36.667 + 40.088 = $105.1 Mil.
|Accounts Receivable was $95.8 Mil.
Revenue was 225.008 + 212.752 + 253.494 + 257.113 = $948.4 Mil.
Gross Profit was 66.95 + 61.101 + 82.19 + 84.368 = $294.6 Mil.
Total Current Assets was $281.3 Mil.
Total Assets was $709.3 Mil.
Property, Plant and Equipment(Net PPE) was $162.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $37.8 Mil.
Selling, General & Admin. Expense(SGA) was $187.6 Mil.
Total Current Liabilities was $90.2 Mil.
Long-Term Debt was $1.3 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)|
|=||(102.943 / 991.056)||/||(95.826 / 948.367)|
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)|
|=||(294.609 / 948.367)||/||(305.423 / 991.056)|
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 - (303.828 + 178.719) / 745.107)||/||(1 - (281.308 + 162.218) / 709.313)|
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))|
|=||(37.847 / (37.847 + 162.218))||/||(39.085 / (39.085 + 178.719))|
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)|
|=||(191.311 / 991.056)||/||(187.649 / 948.367)|
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)|
|=||((1.418 + 95.729) / 745.107)||/||((1.334 + 90.171) / 709.313)|
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|
|=||(72.357 - 0.662||-||105.056)||/||745.107|
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 -2.64 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