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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.
Pep Boys - Manny Moe & Jack has a M-score of -2.53 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Pep Boys - Manny Moe & Jack was -0.82. The lowest was -3.57. And the median was -2.60.
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 Pep Boys - Manny Moe & Jack 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 * 1.1034||+||0.528 * 0.9587||+||0.404 * 1.1722||+||0.892 * 0.9843||+||0.115 * 0.9751|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0034||+||4.679 * -0.0368||-||0.327 * 1.0082|
|This Year (Apr14) TTM:||Last Year (Apr13) TTM:|
|Accounts Receivable was $27 Mil.|
Revenue was 538.821 + 495.733 + 507.042 + 527.619 = $2,069 Mil.
Gross Profit was 133.126 + 104.016 + 122.812 + 138.708 = $499 Mil.
Total Current Assets was $817 Mil.
Total Assets was $1,593 Mil.
Property, Plant and Equipment(Net PPE) was $623 Mil.
Depreciation, Depletion and Amortization(DDA) was $63 Mil.
Selling, General & Admin. Expense(SGA) was $474 Mil.
Total Current Liabilities was $680 Mil.
Long-Term Debt was $203 Mil.
Net Income was 1.608 + -3.331 + 0.964 + 5.368 = $5 Mil.
Non Operating Income was 0.441 + 0.422 + 0.524 + 0.466 = $2 Mil.
Cash Flow from Operations was 11.454 + -3.45 + 31.656 + 21.763 = $61 Mil.
|Accounts Receivable was $25 Mil.
Revenue was 536.173 + 530.847 + 509.608 + 525.671 = $2,102 Mil.
Gross Profit was 121.84 + 117.207 + 116.04 + 130.601 = $486 Mil.
Total Current Assets was $818 Mil.
Total Assets was $1,596 Mil.
Property, Plant and Equipment(Net PPE) was $648 Mil.
Depreciation, Depletion and Amortization(DDA) was $64 Mil.
Selling, General & Admin. Expense(SGA) was $480 Mil.
Total Current Liabilities was $680 Mil.
Long-Term Debt was $198 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)|
|=||(27.385 / 2069.215)||/||(25.215 / 2102.299)|
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)|
|=||(104.016 / 2102.299)||/||(133.126 / 2069.215)|
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 - (817.246 + 622.866) / 1592.951)||/||(1 - (817.662 + 647.636) / 1595.928)|
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))|
|=||(64.021 / (64.021 + 647.636))||/||(63.303 / (63.303 + 622.866))|
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)|
|=||(473.72 / 2069.215)||/||(479.662 / 2102.299)|
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)|
|=||((202.5 + 680.042) / 1592.951)||/||((197.5 + 679.513) / 1595.928)|
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|
|=||(4.609 - 1.853||-||61.423)||/||1592.951|
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.
Pep Boys - Manny Moe & Jack has a M-score of -2.53 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
Pep Boys - Manny Moe & Jack Annual Data
Pep Boys - Manny Moe & Jack Quarterly Data