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PetSmart Inc (NAS:PETM)
Beneish M-Score
0.00 (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.

During the past 13 years, the highest Beneish M-Score of PetSmart Inc was 0.00. The lowest was 0.00. And the median was 0.00.

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 daysÂ’ 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) = (2143.377 / 6990.927) / (2124.116 / 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

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

 Jan06 Jan07 Jan08 Jan09 Jan10 Jan11 Jan12 Jan13 Jan14 Jan15 DSRI 1.2169 0.8795 1.2235 0.9088 1.0199 0.9684 0.9301 1.2117 0.9837 GMI 0.9872 1.0126 1.0045 1.0415 1.037 0.9797 0.9845 0.9673 0.9974 AQI 0.9919 0.9747 1.1065 0.7995 1.0263 1.1014 0.9678 1.1014 1.0774 SGI 1.118 1.1259 1.1036 1.084 1.0535 1.067 1.0737 1.1055 1.0234 DEPI 0.9543 1.061 0.9606 0.9322 0.8961 0.9538 0.9488 0.9331 0.9831 SGAI 0.9901 1.0126 0.9974 0.9567 0.9699 0.9989 0.9887 0.9808 0.9852 LVGI 1.2324 1.0585 1.0622 0.891 1.0197 0.9935 1.0518 1.0306 1.0278 TATA -0.0726 -0.0353 -0.0789 -0.0967 -0.1497 -0.0882 -0.1121 -0.1039 -0.0776 M-score -2.60 -2.66 -2.53 -2.97 -3.10 -2.83 -3.05 -2.67 -2.82

PetSmart Inc Quarterly Data

 Oct12 Jan13 Apr13 Jul13 Oct13 Jan14 Apr14 Jul14 Oct14 Jan15 DSRI 0.6974 1.2117 1.0566 1.1307 0.9839 0.9837 0.9812 1.1438 1.4002 1.1766 GMI 0.9792 0.9673 0.9715 0.9779 0.9842 0.9974 1.0033 1.0068 1.0108 1.0097 AQI 0.9886 1.1014 1.1351 1.0938 1.1263 1.0774 1.0541 1.0458 1.5931 1.2684 SGI 1.087 1.1055 1.0937 1.0846 1.0727 1.0234 1.0141 1.0049 1.0017 1.0282 DEPI 0.9436 0.9331 0.9474 0.9501 0.9772 0.9831 0.9914 1.0069 0.9737 1.2163 SGAI 0.9758 0.9808 0.9871 0.9803 0.9859 0.9852 0.9788 0.9791 0.982 0.9885 LVGI 1.0152 1.0306 1.0482 1.0185 0.9847 1.0278 1.0059 1.0042 0.9999 0.9119 TATA -0.0985 -0.1039 -0.1107 -0.0953 -0.0799 -0.0776 -0.0735 -0.0717 -0.0746 0.0256 M-score -3.16 -2.67 -2.84 -2.71 -2.76 -2.82 -2.80 -2.65 -2.21 -2.00
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