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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 Penn National Gaming Inc was -0.50. The lowest was -8.41. And the median was -2.49.
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 Penn National Gaming 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 * 1.1638||+||0.528 * 0.9886||+||0.404 * 1.2231||+||0.892 * 0.8562||+||0.115 * 0.5061|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.7687||+||4.679 * -0.4214||-||0.327 * 1.2927|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $42 Mil.|
Revenue was 645.94 + 652.146 + 641.08 + 644.702 = $2,584 Mil.
Gross Profit was 278.545 + 287.636 + 277.465 + 273.94 = $1,118 Mil.
Total Current Assets was $404 Mil.
Total Assets was $2,463 Mil.
Property, Plant and Equipment(Net PPE) was $745 Mil.
Depreciation, Depletion and Amortization(DDA) was $195 Mil.
Selling, General & Admin. Expense(SGA) was $846 Mil.
Total Current Liabilities was $440 Mil.
Long-Term Debt was $1,199 Mil.
Net Income was 8.499 + 4.176 + 4.537 + -888.747 = $-872 Mil.
Non Operating Income was 3.874 + -0.35 + 4.114 + -58.668 = $-51 Mil.
Cash Flow from Operations was 82.811 + 98.265 + 23.608 + 12.844 = $218 Mil.
|Accounts Receivable was $42 Mil.
Revenue was 714.435 + 761.371 + 798.246 + 743.811 = $3,018 Mil.
Gross Profit was 304.388 + 330.572 + 345.963 + 309.492 = $1,290 Mil.
Total Current Assets was $401 Mil.
Total Assets was $5,397 Mil.
Property, Plant and Equipment(Net PPE) was $2,642 Mil.
Depreciation, Depletion and Amortization(DDA) was $310 Mil.
Selling, General & Admin. Expense(SGA) was $559 Mil.
Total Current Liabilities was $478 Mil.
Long-Term Debt was $2,300 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)|
|=||(42.303 / 2583.868)||/||(42.453 / 3017.863)|
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)|
|=||(287.636 / 3017.863)||/||(278.545 / 2583.868)|
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 - (404.073 + 745.355) / 2463.099)||/||(1 - (401.235 + 2642.297) / 5396.738)|
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))|
|=||(310.475 / (310.475 + 2642.297))||/||(195.474 / (195.474 + 745.355))|
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)|
|=||(846.231 / 2583.868)||/||(558.825 / 3017.863)|
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)|
|=||((1198.848 + 440.271) / 2463.099)||/||((2299.929 + 478.163) / 5396.738)|
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|
|=||(-871.535 - -51.03||-||217.528)||/||2463.099|
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.
Penn National Gaming Inc has a M-score of -4.63 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
Penn National Gaming Inc Annual Data
Penn National Gaming Inc Quarterly Data