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PetSmart Inc. (NAS:PETM)
Beneish M-Score
-2.82 (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 -2.82 suggests that the company is not a manipulator.

PETM' s 10-Year Beneish M-Score Range
Min: -4   Max: -1.83
Current: -2.82

-4
-1.83

During the past 13 years, the highest Beneish M-Score of PetSmart Inc. was -1.83. The lowest was -4.00. And the median was -2.68.


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 * 0.9837+0.528 * 0.9974+0.404 * 1.0774+0.892 * 1.0234+0.115 * 0.9831
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9852+4.679 * -0.0776-0.327 * 1.0278
=-2.82

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

This Year (Jan14) TTM:Last Year (Jan13) TTM:
Accounts Receivable was $73 Mil.
Revenue was 1804.866 + 1695.168 + 1705.997 + 1710.596 = $6,917 Mil.
Gross Profit was 565.998 + 504.973 + 515.22 + 529.746 = $2,116 Mil.
Total Current Assets was $1,318 Mil.
Total Assets was $2,522 Mil.
Property, Plant and Equipment(Net PPE) was $953 Mil.
Depreciation, Depletion and Amortization(DDA) was $235 Mil.
Selling, General & Admin. Expense(SGA) was $1,423 Mil.
Total Current Liabilities was $794 Mil.
Long-Term Debt was $452 Mil.
Net Income was 131.516 + 92.221 + 93.368 + 102.415 = $420 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 273.907 + 107.238 + 86.789 + 147.246 = $615 Mil.
Accounts Receivable was $72 Mil.
Revenue was 1879.166 + 1629.511 + 1619.667 + 1629.893 = $6,758 Mil.
Gross Profit was 593.438 + 482.512 + 488.815 + 497.374 = $2,062 Mil.
Total Current Assets was $1,317 Mil.
Total Assets was $2,537 Mil.
Property, Plant and Equipment(Net PPE) was $986 Mil.
Depreciation, Depletion and Amortization(DDA) was $238 Mil.
Selling, General & Admin. Expense(SGA) was $1,411 Mil.
Total Current Liabilities was $755 Mil.
Long-Term Debt was $465 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)
=(72.685 / 6916.627) / (72.198 / 6758.237)
=0.01050873 / 0.01068296
=0.9837

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)
=(504.973 / 6758.237) / (565.998 / 6916.627)
=0.30512973 / 0.30592036
=0.9974

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 - (1318.243 + 952.955) / 2521.968) / (1 - (1317.136 + 985.707) / 2536.981)
=0.09943425 / 0.09229001
=1.0774

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
=6916.627 / 6758.237
=1.0234

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))
=(238.406 / (238.406 + 985.707)) / (235.431 / (235.431 + 952.955))
=0.19475816 / 0.19810987
=0.9831

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)
=(1422.619 / 6916.627) / (1410.922 / 6758.237)
=0.20568103 / 0.20877072
=0.9852

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)
=((451.597 + 794.345) / 2521.968) / ((464.578 + 754.892) / 2536.981)
=0.49403561 / 0.48067762
=1.0278

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
=(419.52 - 0 - 615.18) / 2521.968
=-0.0776

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 -2.82 suggests that the company will not 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

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
DSRI 1.41850.93011.00550.81190.69741.21171.05661.13070.98390.9837
GMI 0.97410.98450.98220.98270.97920.96730.97150.97790.98420.9974
AQI 1.03970.96780.93350.95020.98861.10141.13511.09381.12631.0774
SGI 1.07461.07371.08011.08481.0871.10551.09371.08461.07271.0234
DEPI 0.93320.94880.94970.95750.94360.93310.94740.95010.97720.9831
SGAI 1.00520.98870.98540.98280.97580.98080.98710.98030.98590.9852
LVGI 1.03671.05181.07911.0621.01521.03061.04821.01850.98471.0278
TATA -0.1167-0.1121-0.1193-0.1074-0.0985-0.1039-0.1107-0.0953-0.0799-0.0776
M-score -2.59-3.05-3.03-3.13-3.16-2.67-2.84-2.71-2.76-2.82
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