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PetSmart Inc (NAS:PETM)
Beneish M-Score
-2.21 (As of Today)

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.

PetSmart Inc has a M-score of -2.21 signals that the company is a manipulator.

PETM' s 10-Year Beneish M-Score Range
Min: -4   Max: -1.66
Current: -2.21

-4
-1.66

During the past 13 years, the highest Beneish M-Score of PetSmart Inc was -1.66. The lowest was -4.00. And the median was -2.77.


Definition

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 PetSmart 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 * 1.4002+0.528 * 1.0108+0.404 * 1.5931+0.892 * 1.0017+0.115 * 0.9737
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.982+4.679 * -0.0746-0.327 * 0.9999
=-2.21

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Oct14) TTM:Last Year (Oct13) TTM:
Accounts Receivable was $74 Mil.
Revenue was 1739.117 + 1729.939 + 1729.132 + 1804.866 = $7,003 Mil.
Gross Profit was 512.163 + 515.117 + 530.838 + 565.998 = $2,124 Mil.
Total Current Assets was $1,390 Mil.
Total Assets was $2,709 Mil.
Property, Plant and Equipment(Net PPE) was $923 Mil.
Depreciation, Depletion and Amortization(DDA) was $235 Mil.
Selling, General & Admin. Expense(SGA) was $1,422 Mil.
Total Current Liabilities was $816 Mil.
Long-Term Debt was $449 Mil.
Net Income was 92.156 + 98.116 + 103.766 + 131.516 = $426 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 125.347 + 91.864 + 136.506 + 273.907 = $628 Mil.
Accounts Receivable was $53 Mil.
Revenue was 1695.168 + 1705.997 + 1710.596 + 1879.166 = $6,991 Mil.
Gross Profit was 504.973 + 515.22 + 529.746 + 593.438 = $2,143 Mil.
Total Current Assets was $1,401 Mil.
Total Assets was $2,596 Mil.
Property, Plant and Equipment(Net PPE) was $957 Mil.
Depreciation, Depletion and Amortization(DDA) was $236 Mil.
Selling, General & Admin. Expense(SGA) was $1,445 Mil.
Total Current Liabilities was $759 Mil.
Long-Term Debt was $454 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(73.745 / 7003.054) / (52.576 / 6990.927)
=0.01053041 / 0.0075206
=1.4002

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(515.117 / 6990.927) / (512.163 / 7003.054)
=0.3065941 / 0.30331281
=1.0108

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (1389.921 + 922.943) / 2709.497) / (1 - (1400.786 + 956.653) / 2595.982)
=0.14638621 / 0.09188931
=1.5931

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=7003.054 / 6990.927
=1.0017

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))
=(235.703 / (235.703 + 956.653)) / (235.114 / (235.114 + 922.943))
=0.19767838 / 0.20302455
=0.9737

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)
=(1421.811 / 7003.054) / (1445.388 / 6990.927)
=0.20302728 / 0.20675198
=0.982

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)
=((449.432 + 816.22) / 2709.497) / ((453.62 + 759.08) / 2595.982)
=0.46711696 / 0.467145
=0.9999

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(425.554 - 0 - 627.624) / 2709.497
=-0.0746

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.

PetSmart Inc has a M-score of -2.21 signals that the company is likely to be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

PetSmart Inc Annual Data

Jan05Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14
DSRI 1.41611.21690.87951.22350.90881.01990.96840.93011.21170.9837
GMI 0.97390.98721.01261.00451.04151.0370.97970.98450.96730.9974
AQI 0.91260.99190.97471.10650.79951.02631.10140.96781.10141.0774
SGI 1.12371.1181.12591.10361.0841.05351.0671.07371.10551.0234
DEPI 1.05480.95431.0610.96060.93220.89610.95380.94880.93310.9831
SGAI 1.02050.99011.01260.99740.95670.96990.99890.98870.98080.9852
LVGI 0.97941.23241.05851.06220.8911.01970.99351.05181.03061.0278
TATA -0.0489-0.0726-0.0353-0.0789-0.0967-0.1497-0.0882-0.1121-0.1039-0.0776
M-score -2.26-2.60-2.66-2.53-2.97-3.10-2.83-3.05-2.67-2.82

PetSmart Inc Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
DSRI 0.81190.69741.21171.05661.13070.98390.98370.98121.14381.4002
GMI 0.98270.97920.96730.97150.97790.98420.99741.00331.00681.0108
AQI 0.95020.98861.10141.13511.09381.12631.07741.05411.04581.5931
SGI 1.08481.0871.10551.09371.08461.07271.02341.01411.00491.0017
DEPI 0.95750.94360.93310.94740.95010.97720.98310.99141.00690.9737
SGAI 0.98280.97580.98080.98710.98030.98590.98520.97880.97910.982
LVGI 1.0621.01521.03061.04821.01850.98471.02781.00591.00420.9999
TATA -0.1074-0.0985-0.1039-0.1107-0.0953-0.0799-0.0776-0.0735-0.0717-0.0746
M-score -3.13-3.16-2.67-2.84-2.71-2.76-2.82-2.80-2.65-2.21
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