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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.
Penn National Gaming Inc has a M-score of -4.46 suggests that the company is not a 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 * 1.5135||+||0.528 * 0.9899||+||0.404 * 1.2286||+||0.892 * 0.881||+||0.115 * 0.3321|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.5184||+||4.679 * -0.4696||-||0.327 * 1.2039|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|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.
Net Income was 2.78 + 4.537 + -888.747 + 41.317 = $-840 Mil.
Non Operating Income was -0.35 + 4.114 + -58.668 + 1.86 = $-53 Mil.
Cash Flow from Operations was 98.265 + 23.608 + 12.844 + 136.528 = $271 Mil.
|Accounts Receivable was $52 Mil.
Revenue was 761.371 + 798.246 + 743.811 + 707.044 = $3,010 Mil.
Gross Profit was 330.572 + 345.963 + 309.492 + 298.68 = $1,285 Mil.
Total Current Assets was $401 Mil.
Total Assets was $5,433 Mil.
Property, Plant and Equipment(Net PPE) was $2,678 Mil.
Depreciation, Depletion and Amortization(DDA) was $293 Mil.
Selling, General & Admin. Expense(SGA) was $565 Mil.
Total Current Liabilities was $457 Mil.
Long-Term Debt was $2,394 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)|
|=||(69.521 / 2652.363)||/||(52.135 / 3010.472)|
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)|
|=||(277.465 / 3010.472)||/||(287.636 / 2652.363)|
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 - (497.101 + 557.044) / 2253.858)||/||(1 - (401.282 + 2678.003) / 5433.37)|
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))|
|=||(292.906 / (292.906 + 2678.003))||/||(235.189 / (235.189 + 557.044))|
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)|
|=||(756.236 / 2652.363)||/||(565.3 / 3010.472)|
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)|
|=||((1027.976 + 395.68) / 2253.858)||/||((2393.606 + 457.048) / 5433.37)|
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|
|=||(-840.113 - -53.044||-||271.245)||/||2253.858|
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 -4.46 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