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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 Pier 1 Imports Inc was 6.79. The lowest was -4.03. And the median was -2.80.
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 * 0.9941||+||0.528 * 1.0392||+||0.404 * 0.8815||+||0.892 * 0.9635||+||0.115 * 0.8608|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0264||+||4.679 * -0.1212||-||0.327 * 1.0269|
|This Year (Nov16) TTM:||Last Year (Nov15) TTM:|
|Accounts Receivable was $39 Mil.|
Revenue was 475.901 + 405.823 + 418.37 + 542.325 = $1,842 Mil.
Gross Profit was 196.393 + 145.036 + 148.967 + 196.894 = $687 Mil.
Total Current Assets was $642 Mil.
Total Assets was $867 Mil.
Property, Plant and Equipment(Net PPE) was $190 Mil.
Depreciation, Depletion and Amortization(DDA) was $60 Mil.
Selling, General & Admin. Expense(SGA) was $590 Mil.
Total Current Liabilities was $334 Mil.
Long-Term Debt was $199 Mil.
Net Income was 13.577 + -4.069 + -6.02 + 18.675 = $22 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 58.678 + -87.128 + 33.523 + 122.183 = $127 Mil.
|Accounts Receivable was $41 Mil.
Revenue was 478.047 + 434.992 + 436.866 + 562.375 = $1,912 Mil.
Gross Profit was 183.993 + 154.554 + 169.539 + 233.217 = $741 Mil.
Total Current Assets was $627 Mil.
Total Assets was $880 Mil.
Property, Plant and Equipment(Net PPE) was $212 Mil.
Depreciation, Depletion and Amortization(DDA) was $55 Mil.
Selling, General & Admin. Expense(SGA) was $596 Mil.
Total Current Liabilities was $323 Mil.
Long-Term Debt was $203 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)|
|=||(39.089 / 1842.419)||/||(40.812 / 1912.28)|
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)|
|=||(741.303 / 1912.28)||/||(687.29 / 1842.419)|
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 - (641.506 + 189.787) / 867.406)||/||(1 - (627.047 + 211.599) / 880.217)|
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))|
|=||(54.864 / (54.864 + 211.599))||/||(59.664 / (59.664 + 189.787))|
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)|
|=||(589.752 / 1842.419)||/||(596.39 / 1912.28)|
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)|
|=||((199.373 + 333.751) / 867.406)||/||((203.464 + 323.352) / 880.217)|
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|
|=||(22.163 - 0||-||127.256)||/||867.406|
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 -3.14 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