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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 Prestige Brands Holdings Inc was -2.16. The lowest was -4.19. And the median was -2.42.
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 Prestige Brands Holdings Inc 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 * 1.1624||+||0.528 * 0.9706||+||0.404 * 1.012||+||0.892 * 1.2672||+||0.115 * 0.9071|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0702||+||4.679 * -0.0315||-||0.327 * 1.0793|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $83.6 Mil.|
Revenue was 192.132 + 190.046 + 197.606 + 181.269 = $761.1 Mil.
Gross Profit was 112.236 + 110.07 + 111.745 + 102.542 = $436.6 Mil.
Total Current Assets was $201.1 Mil.
Total Assets was $2,636.5 Mil.
Property, Plant and Equipment(Net PPE) was $13.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $20.5 Mil.
Selling, General & Admin. Expense(SGA) was $188.8 Mil.
Total Current Liabilities was $101.8 Mil.
Long-Term Debt was $1,506.5 Mil.
Net Income was 26.173 + 23.772 + 21.293 + 16.463 = $87.7 Mil.
Non Operating Income was -0.451 + 0 + 1.133 + 0 = $0.7 Mil.
Cash Flow from Operations was 43.521 + 52.113 + 47.084 + 27.387 = $170.1 Mil.
|Accounts Receivable was $56.8 Mil.
Revenue was 145.702 + 143.053 + 144.871 + 166.945 = $600.6 Mil.
Gross Profit was 81.866 + 78.837 + 80.468 + 93.222 = $334.4 Mil.
Total Current Assets was $160.1 Mil.
Total Assets was $1,854.0 Mil.
Property, Plant and Equipment(Net PPE) was $10.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $13.2 Mil.
Selling, General & Admin. Expense(SGA) was $139.2 Mil.
Total Current Liabilities was $78.3 Mil.
Long-Term Debt was $969.6 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)|
|=||(83.62 / 761.053)||/||(56.768 / 600.571)|
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)|
|=||(110.07 / 600.571)||/||(112.236 / 761.053)|
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 - (201.059 + 13.154) / 2636.502)||/||(1 - (160.097 + 10.673) / 1853.95)|
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))|
|=||(13.179 / (13.179 + 10.673))||/||(20.499 / (20.499 + 13.154))|
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)|
|=||(188.833 / 761.053)||/||(139.236 / 600.571)|
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)|
|=||((1506.541 + 101.792) / 2636.502)||/||((969.558 + 78.319) / 1853.95)|
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|
|=||(87.701 - 0.682||-||170.105)||/||2636.502|
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.
Prestige Brands Holdings Inc has a M-score of -2.30 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
Prestige Brands Holdings Inc Annual Data
Prestige Brands Holdings Inc Quarterly Data