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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.
Pool Corp has a M-score of -2.47 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Pool Corp was -1.87. The lowest was -3.18. And the median was -2.38.
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 Pool Corp 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 * 1.0399||+||0.528 * 1.0189||+||0.404 * 0.969||+||0.892 * 1.0781||+||0.115 * 1.0043|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.969||+||4.679 * -0.0168||-||0.327 * 1.0509|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $211 Mil.|
Revenue was 406.344 + 340.789 + 578.157 + 790.392 = $2,116 Mil.
Gross Profit was 114.1 + 95.793 + 162.557 + 228.166 = $601 Mil.
Total Current Assets was $761 Mil.
Total Assets was $1,013 Mil.
Property, Plant and Equipment(Net PPE) was $55 Mil.
Depreciation, Depletion and Amortization(DDA) was $15 Mil.
Selling, General & Admin. Expense(SGA) was $433 Mil.
Total Current Liabilities was $398 Mil.
Long-Term Debt was $324 Mil.
Net Income was 4.188 + -4.975 + 32.332 + 66.533 = $98 Mil.
Non Operating Income was 0 + 10.478 + -3.088 + 0 = $7 Mil.
Cash Flow from Operations was -37.345 + 51.242 + 86.824 + 7.008 = $108 Mil.
|Accounts Receivable was $188 Mil.
Revenue was 370.362 + 306.818 + 528.027 + 757.175 = $1,962 Mil.
Gross Profit was 104.761 + 88.938 + 151.501 + 222.405 = $568 Mil.
Total Current Assets was $714 Mil.
Total Assets was $954 Mil.
Property, Plant and Equipment(Net PPE) was $49 Mil.
Depreciation, Depletion and Amortization(DDA) was $13 Mil.
Selling, General & Admin. Expense(SGA) was $415 Mil.
Total Current Liabilities was $368 Mil.
Long-Term Debt was $279 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)|
|=||(211.107 / 2115.682)||/||(188.294 / 1962.382)|
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)|
|=||(95.793 / 1962.382)||/||(114.1 / 2115.682)|
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 - (761.039 + 55.212) / 1013.2)||/||(1 - (713.67 + 48.755) / 953.74)|
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))|
|=||(13.286 / (13.286 + 48.755))||/||(14.964 / (14.964 + 55.212))|
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)|
|=||(433.416 / 2115.682)||/||(414.879 / 1962.382)|
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)|
|=||((324.226 + 398.075) / 1013.2)||/||((278.542 + 368.46) / 953.74)|
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|
|=||(98.078 - 7.39||-||107.729)||/||1013.2|
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.
Pool Corp has a M-score of -2.47 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
Pool Corp Annual Data
Pool Corp Quarterly Data