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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 -5.11. And the median was -2.45.
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 * 0.8925||+||0.528 * 0.9929||+||0.404 * 0.8966||+||0.892 * 0.8875||+||0.115 * 1.9859|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.6406||+||4.679 * -0.2075||-||0.327 * 1.1746|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $42 Mil.|
Revenue was 651.361 + 645.94 + 652.146 + 641.08 = $2,591 Mil.
Gross Profit was 278.121 + 278.545 + 287.636 + 277.465 = $1,122 Mil.
Total Current Assets was $386 Mil.
Total Assets was $2,236 Mil.
Property, Plant and Equipment(Net PPE) was $769 Mil.
Depreciation, Depletion and Amortization(DDA) was $179 Mil.
Selling, General & Admin. Expense(SGA) was $868 Mil.
Total Current Liabilities was $436 Mil.
Long-Term Debt was $1,230 Mil.
Net Income was -250.407 + 8.499 + 4.176 + 4.537 = $-233 Mil.
Non Operating Income was 3.255 + 3.874 + -0.35 + 4.114 = $11 Mil.
Cash Flow from Operations was 15.317 + 82.811 + 98.265 + 23.608 = $220 Mil.
|Accounts Receivable was $53 Mil.
Revenue was 644.702 + 714.435 + 761.371 + 798.246 = $2,919 Mil.
Gross Profit was 273.94 + 304.388 + 330.572 + 345.963 = $1,255 Mil.
Total Current Assets was $509 Mil.
Total Assets was $2,184 Mil.
Property, Plant and Equipment(Net PPE) was $497 Mil.
Depreciation, Depletion and Amortization(DDA) was $298 Mil.
Selling, General & Admin. Expense(SGA) was $596 Mil.
Total Current Liabilities was $361 Mil.
Long-Term Debt was $1,023 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)|
|=||(41.618 / 2590.527)||/||(52.538 / 2918.754)|
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)|
|=||(278.545 / 2918.754)||/||(278.121 / 2590.527)|
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 - (386.006 + 769.145) / 2236.43)||/||(1 - (508.861 + 497.457) / 2183.991)|
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))|
|=||(298.326 / (298.326 + 497.457))||/||(178.981 / (178.981 + 769.145))|
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)|
|=||(867.793 / 2590.527)||/||(595.984 / 2918.754)|
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)|
|=||((1229.979 + 435.519) / 2236.43)||/||((1023.194 + 361.469) / 2183.991)|
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|
|=||(-233.195 - 10.893||-||220.001)||/||2236.43|
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 -3.75 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