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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 -3.53. And the median was -2.56.
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 * 1.1019||+||0.528 * 0.9791||+||0.404 * 1.0666||+||0.892 * 0.991||+||0.115 * 1.0717|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9976||+||4.679 * -0.1483||-||0.327 * 0.9852|
|This Year (Apr15) TTM:||Last Year (Apr14) TTM:|
|Accounts Receivable was $200.0 Mil.|
Revenue was 266.414 + 217.686 + 211.44 + 203.532 = $899.1 Mil.
Gross Profit was 90.1 + 74.568 + 70.307 + 70.464 = $305.4 Mil.
Total Current Assets was $379.8 Mil.
Total Assets was $662.8 Mil.
Property, Plant and Equipment(Net PPE) was $64.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $13.3 Mil.
Selling, General & Admin. Expense(SGA) was $268.7 Mil.
Total Current Liabilities was $114.3 Mil.
Long-Term Debt was $181.6 Mil.
Net Income was 9.411 + -42.897 + -0.437 + -1.616 = $-35.5 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was -39.668 + 21.31 + -13.145 + 94.285 = $62.8 Mil.
|Accounts Receivable was $183.1 Mil.
Revenue was 257.314 + 216.079 + 222.121 + 211.705 = $907.2 Mil.
Gross Profit was 87.665 + 74.197 + 71.364 + 68.546 = $301.8 Mil.
Total Current Assets was $436.9 Mil.
Total Assets was $719.1 Mil.
Property, Plant and Equipment(Net PPE) was $60.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $13.4 Mil.
Selling, General & Admin. Expense(SGA) was $271.8 Mil.
Total Current Liabilities was $88.6 Mil.
Long-Term Debt was $237.2 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)|
|=||(200.002 / 899.072)||/||(183.146 / 907.219)|
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)|
|=||(74.568 / 907.219)||/||(90.1 / 899.072)|
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 - (379.783 + 64.723) / 662.815)||/||(1 - (436.92 + 60.113) / 719.094)|
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))|
|=||(13.417 / (13.417 + 60.113))||/||(13.281 / (13.281 + 64.723))|
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)|
|=||(268.681 / 899.072)||/||(271.757 / 907.219)|
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)|
|=||((181.552 + 114.286) / 662.815)||/||((237.218 + 88.563) / 719.094)|
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|
|=||(-35.539 - 0||-||62.782)||/||662.815|
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 -3.06 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