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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 -2.50.
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 * 0.6468||+||0.528 * 0.9959||+||0.404 * 0.875||+||0.892 * 1.0038||+||0.115 * 1.7635|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1807||+||4.679 * -0.2172||-||0.327 * 1.1633|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $45 Mil.|
Revenue was 700.956 + 664.138 + 651.361 + 645.94 = $2,662 Mil.
Gross Profit was 304.537 + 291.314 + 278.121 + 278.545 = $1,153 Mil.
Total Current Assets was $407 Mil.
Total Assets was $2,325 Mil.
Property, Plant and Equipment(Net PPE) was $835 Mil.
Depreciation, Depletion and Amortization(DDA) was $169 Mil.
Selling, General & Admin. Expense(SGA) was $896 Mil.
Total Current Liabilities was $492 Mil.
Long-Term Debt was $1,217 Mil.
Net Income was 16.886 + 10.996 + -250.407 + 8.499 = $-214 Mil.
Non Operating Income was 3.198 + 7.071 + 3.255 + 3.874 = $17 Mil.
Cash Flow from Operations was 109.833 + 65.561 + 15.317 + 82.811 = $274 Mil.
|Accounts Receivable was $70 Mil.
Revenue was 652.146 + 641.08 + 644.702 + 714.435 = $2,652 Mil.
Gross Profit was 287.636 + 277.465 + 273.94 + 304.388 = $1,143 Mil.
Total Current Assets was $497 Mil.
Total Assets was $2,254 Mil.
Property, Plant and Equipment(Net PPE) was $557 Mil.
Depreciation, Depletion and Amortization(DDA) was $235 Mil.
Selling, General & Admin. Expense(SGA) was $756 Mil.
Total Current Liabilities was $396 Mil.
Long-Term Debt was $1,028 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)|
|=||(45.135 / 2662.395)||/||(69.521 / 2652.363)|
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)|
|=||(291.314 / 2652.363)||/||(304.537 / 2662.395)|
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 - (406.641 + 835.462) / 2325.048)||/||(1 - (497.101 + 557.044) / 2253.858)|
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))|
|=||(235.189 / (235.189 + 557.044))||/||(169.106 / (169.106 + 835.462))|
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)|
|=||(896.239 / 2662.395)||/||(756.236 / 2652.363)|
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)|
|=||((1216.908 + 491.524) / 2325.048)||/||((1027.976 + 395.68) / 2253.858)|
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|
|=||(-214.026 - 17.398||-||273.522)||/||2325.048|
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 -3.87 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