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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.
Pier 1 Imports Inc has a M-score of -2.86 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Pier 1 Imports Inc was 8.63. The lowest was -4.03. And the median was -2.84.
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 Pier 1 Imports 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 * 1.0347||+||0.528 * 1.0533||+||0.404 * 0.9566||+||0.892 * 1.033||+||0.115 * 1.0351|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9958||+||4.679 * -0.0491||-||0.327 * 1.6901|
|This Year (May14) TTM:||Last Year (May13) TTM:|
|Accounts Receivable was $22 Mil.|
Revenue was 419.059 + 515.786 + 465.462 + 395.641 = $1,796 Mil.
Gross Profit was 167.714 + 214.436 + 202.23 + 161.299 = $746 Mil.
Total Current Assets was $712 Mil.
Total Assets was $946 Mil.
Property, Plant and Equipment(Net PPE) was $188 Mil.
Depreciation, Depletion and Amortization(DDA) was $47 Mil.
Selling, General & Admin. Expense(SGA) was $537 Mil.
Total Current Liabilities was $306 Mil.
Long-Term Debt was $206 Mil.
Net Income was 15.055 + 42.592 + 26.758 + 17.834 = $102 Mil.
Non Operating Income was 0 + 0.505 + 0.592 + 0.272 = $1 Mil.
Cash Flow from Operations was 27.133 + 98.07 + 71.603 + -49.479 = $147 Mil.
|Accounts Receivable was $20 Mil.
Revenue was 394.853 + 551.625 + 424.527 + 367.615 = $1,739 Mil.
Gross Profit was 167.597 + 254.978 + 186.259 + 151.549 = $760 Mil.
Total Current Assets was $696 Mil.
Total Assets was $896 Mil.
Property, Plant and Equipment(Net PPE) was $154 Mil.
Depreciation, Depletion and Amortization(DDA) was $40 Mil.
Selling, General & Admin. Expense(SGA) was $522 Mil.
Total Current Liabilities was $277 Mil.
Long-Term Debt was $10 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)|
|=||(21.824 / 1795.948)||/||(20.418 / 1738.62)|
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)|
|=||(214.436 / 1738.62)||/||(167.714 / 1795.948)|
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 - (711.593 + 187.804) / 945.673)||/||(1 - (696.09 + 154.026) / 895.946)|
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))|
|=||(40.388 / (40.388 + 154.026))||/||(47.155 / (47.155 + 187.804))|
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)|
|=||(537.186 / 1795.948)||/||(522.224 / 1738.62)|
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)|
|=||((206.026 + 305.962) / 945.673)||/||((9.5 + 277.499) / 895.946)|
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|
|=||(102.239 - 1.369||-||147.327)||/||945.673|
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.
Pier 1 Imports Inc has a M-score of -2.86 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
Pier 1 Imports Inc Annual Data
Pier 1 Imports Inc Quarterly Data