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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 Perry Ellis International Inc was 3.25. The lowest was -3.37. And the median was -2.57.
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 Perry Ellis International 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 * 1.1725||+||0.528 * 0.938||+||0.404 * 0.9652||+||0.892 * 0.9713||+||0.115 * 0.922|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0696||+||4.679 * -0.0882||-||0.327 * 0.8982|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Jul16) TTM:||Last Year (Jul15) TTM:|
|Accounts Receivable was $133.7 Mil.|
Revenue was 201.653 + 261.294 + 214.363 + 205.439 = $882.7 Mil.
Gross Profit was 73.831 + 95.084 + 79.73 + 73.295 = $321.9 Mil.
Total Current Assets was $304.9 Mil.
Total Assets was $559.3 Mil.
Property, Plant and Equipment(Net PPE) was $63.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.6 Mil.
Selling, General & Admin. Expense(SGA) was $280.6 Mil.
Total Current Liabilities was $96.6 Mil.
Long-Term Debt was $104.3 Mil.
Net Income was -3.565 + 14.25 + -17.695 + 2.273 = $-4.7 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 73.934 + -39 + 11.527 + -1.838 = $44.6 Mil.
|Accounts Receivable was $117.4 Mil.
Revenue was 213.299 + 266.414 + 217.686 + 211.44 = $908.8 Mil.
Gross Profit was 75.942 + 90.1 + 74.568 + 70.307 = $310.9 Mil.
Total Current Assets was $331.0 Mil.
Total Assets was $614.0 Mil.
Property, Plant and Equipment(Net PPE) was $66.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $13.7 Mil.
Selling, General & Admin. Expense(SGA) was $270.1 Mil.
Total Current Liabilities was $115.7 Mil.
Long-Term Debt was $129.9 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)|
|=||(133.691 / 882.749)||/||(117.392 / 908.839)|
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)|
|=||(310.917 / 908.839)||/||(321.94 / 882.749)|
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 - (304.915 + 63.796) / 559.345)||/||(1 - (330.995 + 66.219) / 614.024)|
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))|
|=||(13.74 / (13.74 + 66.219))||/||(14.613 / (14.613 + 63.796))|
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)|
|=||(280.589 / 882.749)||/||(270.077 / 908.839)|
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)|
|=||((104.338 + 96.628) / 559.345)||/||((129.895 + 115.718) / 614.024)|
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|
|=||(-4.737 - 0||-||44.623)||/||559.345|
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.
Perry Ellis International Inc has a M-score of -2.79 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
Perry Ellis International Inc Annual Data
Perry Ellis International Inc Quarterly Data