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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 -2.54.
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 * 1.025||+||0.528 * 1.0199||+||0.404 * 1.046||+||0.892 * 1.1213||+||0.115 * 1.0775|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8812||+||4.679 * -0.0751||-||0.327 * 2.9715|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $47 Mil.|
Revenue was 756.451 + 733.967 + 739.297 + 700.956 = $2,931 Mil.
Gross Profit was 323.055 + 305.004 + 315.927 + 304.537 = $1,249 Mil.
Total Current Assets was $340 Mil.
Total Assets was $5,129 Mil.
Property, Plant and Equipment(Net PPE) was $2,935 Mil.
Depreciation, Depletion and Amortization(DDA) was $262 Mil.
Selling, General & Admin. Expense(SGA) was $450 Mil.
Total Current Liabilities was $530 Mil.
Long-Term Debt was $5,097 Mil.
Net Income was 23.708 + -9.066 + 4.9 + 2.983 = $23 Mil.
Non Operating Income was 2.183 + 3.66 + 6.431 + 3.198 = $15 Mil.
Cash Flow from Operations was 71.333 + 92.837 + 106.453 + 121.656 = $392 Mil.
|Accounts Receivable was $41 Mil.
Revenue was 664.138 + 651.361 + 645.94 + 652.146 = $2,614 Mil.
Gross Profit was 291.314 + 278.121 + 278.545 + 287.636 = $1,136 Mil.
Total Current Assets was $410 Mil.
Total Assets was $4,724 Mil.
Property, Plant and Equipment(Net PPE) was $2,683 Mil.
Depreciation, Depletion and Amortization(DDA) was $260 Mil.
Selling, General & Admin. Expense(SGA) was $455 Mil.
Total Current Liabilities was $504 Mil.
Long-Term Debt was $1,240 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)|
|=||(47.029 / 2930.671)||/||(40.918 / 2613.585)|
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)|
|=||(305.004 / 2613.585)||/||(323.055 / 2930.671)|
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 - (340.42 + 2935.27) / 5128.688)||/||(1 - (409.887 + 2682.661) / 4724.485)|
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))|
|=||(259.926 / (259.926 + 2682.661))||/||(262.112 / (262.112 + 2935.27))|
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)|
|=||(449.681 / 2930.671)||/||(455.117 / 2613.585)|
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)|
|=||((5097.165 + 530.274) / 5128.688)||/||((1240.459 + 504.119) / 4724.485)|
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|
|=||(22.525 - 15.472||-||392.279)||/||5128.688|
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 -3.29 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