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GuruFocus has detected 6 Warning Signs with Penn National Gaming Inc $PENN.
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Penn National Gaming Inc (NAS:PENN)
Beneish M-Score
-2.44 (As of Today)

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.

Penn National Gaming Inc has a M-score of -2.44 suggests that the company is not a manipulator.

PENN' s Beneish M-Score Range Over the Past 10 Years
Min: -3.92   Max: -1.56
Current: -2.44

-3.92
-1.56

During the past 13 years, the highest Beneish M-Score of Penn National Gaming Inc was -1.56. The lowest was -3.92. And the median was -2.51.


Definition

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 * 1.2805+0.528 * 1.0042+0.404 * 1.0149+0.892 * 1.0691+0.115 * 0.913
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0029+4.679 * -0.062-0.327 * 0.9664
=-2.44

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $62 Mil.
Revenue was 742.91 + 765.597 + 769.422 + 756.451 = $3,034 Mil.
Gross Profit was 323.128 + 320.853 + 328.348 + 323.055 = $1,295 Mil.
Total Current Assets was $399 Mil.
Total Assets was $4,974 Mil.
Property, Plant and Equipment(Net PPE) was $2,820 Mil.
Depreciation, Depletion and Amortization(DDA) was $271 Mil.
Selling, General & Admin. Expense(SGA) was $482 Mil.
Total Current Liabilities was $536 Mil.
Long-Term Debt was $4,787 Mil.
Net Income was 5.032 + 46.535 + 34.035 + 23.708 = $109 Mil.
Non Operating Income was 2.974 + 3.909 + 3.592 + 2.183 = $13 Mil.
Cash Flow from Operations was 93.302 + 121.858 + 118.33 + 71.333 = $405 Mil.
Accounts Receivable was $45 Mil.
Revenue was 733.967 + 739.297 + 700.956 + 664.138 = $2,838 Mil.
Gross Profit was 305.004 + 315.927 + 304.537 + 291.314 = $1,217 Mil.
Total Current Assets was $372 Mil.
Total Assets was $5,139 Mil.
Property, Plant and Equipment(Net PPE) was $2,980 Mil.
Depreciation, Depletion and Amortization(DDA) was $259 Mil.
Selling, General & Admin. Expense(SGA) was $449 Mil.
Total Current Liabilities was $558 Mil.
Long-Term Debt was $5,133 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(61.855 / 3034.38) / (45.186 / 2838.358)
=0.02038472 / 0.01591977
=1.2805

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(1216.782 / 2838.358) / (1295.384 / 3034.38)
=0.42869222 / 0.42690237
=1.0042

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (399.265 + 2820.383) / 4974.484) / (1 - (372.476 + 2980.068) / 5138.752)
=0.35276744 / 0.34759568
=1.0149

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=3034.38 / 2838.358
=1.0691

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))
=(259.461 / (259.461 + 2980.068)) / (271.214 / (271.214 + 2820.383))
=0.0800922 / 0.08772618
=0.913

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)
=(481.88 / 3034.38) / (449.433 / 2838.358)
=0.15880674 / 0.15834261
=1.0029

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)
=((4787.424 + 536.316) / 4974.484) / ((5132.931 + 557.774) / 5138.752)
=1.07020949 / 1.10740993
=0.9664

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(109.31 - 12.658 - 404.823) / 4974.484
=-0.062

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 -2.44 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Penn National Gaming Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.01160.77661.09540.91791.11840.9880.94660.84940.99091.2805
GMI 1.04681.04551.02150.98280.98860.97440.97640.99021.01261.0064
AQI 0.98480.79480.86731.1020.91271.03490.77121.05830.99071.0149
SGI 1.03630.99440.97781.03791.11510.98051.03310.93261.09571.0691
DEPI 1.03580.99570.91340.98141.14751.02260.74651.22561.13420.913
SGAI 0.85851.07471.00820.96870.92361.21530.98950.92750.91880.997
LVGI 0.95710.79261.05540.98730.9381.05970.57213.56370.97370.9664
TATA -0.0523-0.1492-0.127-0.1193-0.0681-0.0541-0.2218-0.0988-0.0815-0.062
M-score -2.62-3.39-3.08-3.04-2.58-2.81-3.53-3.92-2.74-2.44

Penn National Gaming Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.1450.84940.77210.61240.85770.99091.0250.92580.96161.2805
GMI 0.99050.99020.99090.99841.00451.01261.01991.02041.02281.0042
AQI 1.22311.05830.65120.65420.63410.99071.0461.06391.15631.0149
SGI 0.87030.93260.99731.06011.1281.09571.12131.12651.09791.0691
DEPI 0.38771.22564.06544.06793.49641.13421.07751.01720.90720.913
SGAI 0.9780.92750.93490.94160.89670.91880.88120.84460.89661.0029
LVGI 1.29273.56370.5820.58850.62350.97372.97152.92552.5760.9664
TATA -0.3757-0.0988-0.1044-0.1045-0.0956-0.0815-0.0751-0.0683-0.0614-0.062
M-score -4.30-3.92-2.83-2.92-2.66-2.74-3.29-3.32-3.15-2.44
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