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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 * 1.0506||+||0.528 * 0.9874||+||0.404 * 1.0708||+||0.892 * 1.0109||+||0.115 * 1.0399|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9819||+||4.679 * -0.0956||-||0.327 * 0.9606|
|This Year (Jul15) TTM:||Last Year (Jul14) TTM:|
|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.
Net Income was -1.281 + 9.411 + -42.897 + -0.437 = $-35.2 Mil.
Non Operating Income was -5.121 + 0 + 0 + 0 = $-5.1 Mil.
Cash Flow from Operations was 60.144 + -39.668 + 21.31 + -13.145 = $28.6 Mil.
|Accounts Receivable was $110.5 Mil.
Revenue was 203.532 + 257.314 + 216.079 + 222.121 = $899.0 Mil.
Gross Profit was 70.464 + 87.665 + 74.197 + 71.364 = $303.7 Mil.
Total Current Assets was $390.5 Mil.
Total Assets was $674.5 Mil.
Property, Plant and Equipment(Net PPE) was $61.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $13.4 Mil.
Selling, General & Admin. Expense(SGA) was $272.1 Mil.
Total Current Liabilities was $108.4 Mil.
Long-Term Debt was $172.5 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)|
|=||(117.392 / 908.839)||/||(110.532 / 899.046)|
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)|
|=||(90.1 / 899.046)||/||(75.942 / 908.839)|
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 - (330.995 + 66.219) / 614.024)||/||(1 - (390.466 + 61.632) / 674.537)|
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))|
|=||(13.41 / (13.41 + 61.632))||/||(13.74 / (13.74 + 66.219))|
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)|
|=||(270.077 / 908.839)||/||(272.094 / 899.046)|
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)|
|=||((129.895 + 115.718) / 614.024)||/||((172.461 + 108.41) / 674.537)|
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|
|=||(-35.204 - -5.121||-||28.641)||/||614.024|
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 -2.83 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