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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 * 0.8137||+||0.528 * 0.9887||+||0.404 * 0.8769||+||0.892 * 0.9464||+||0.115 * 1.836|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.3838||+||4.679 * -0.2203||-||0.327 * 1.1679|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|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 $417 Mil.
Total Assets was $2,281 Mil.
Property, Plant and Equipment(Net PPE) was $803 Mil.
Depreciation, Depletion and Amortization(DDA) was $175 Mil.
Selling, General & Admin. Expense(SGA) was $881 Mil.
Total Current Liabilities was $455 Mil.
Long-Term Debt was $1,235 Mil.
Net Income was 10.996 + -250.407 + 8.499 + 4.176 = $-227 Mil.
Non Operating Income was 7.071 + 3.255 + 3.874 + -0.35 = $14 Mil.
Cash Flow from Operations was 65.561 + 15.317 + 82.811 + 98.265 = $262 Mil.
|Accounts Receivable was $53 Mil.
Revenue was 641.08 + 644.702 + 714.435 + 761.371 = $2,762 Mil.
Gross Profit was 277.465 + 273.94 + 304.388 + 330.572 = $1,186 Mil.
Total Current Assets was $508 Mil.
Total Assets was $2,253 Mil.
Property, Plant and Equipment(Net PPE) was $550 Mil.
Depreciation, Depletion and Amortization(DDA) was $269 Mil.
Selling, General & Admin. Expense(SGA) was $672 Mil.
Total Current Liabilities was $395 Mil.
Long-Term Debt was $1,035 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)|
|=||(40.918 / 2613.585)||/||(53.137 / 2761.588)|
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)|
|=||(278.121 / 2761.588)||/||(291.314 / 2613.585)|
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 - (417.243 + 802.52) / 2280.678)||/||(1 - (507.637 + 550.427) / 2253.44)|
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))|
|=||(268.621 / (268.621 + 550.427))||/||(174.537 / (174.537 + 802.52))|
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)|
|=||(880.659 / 2613.585)||/||(672.455 / 2761.588)|
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)|
|=||((1235.061 + 454.877) / 2280.678)||/||((1034.835 + 394.833) / 2253.44)|
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|
|=||(-226.736 - 13.85||-||261.954)||/||2280.678|
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 -3.81 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