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GuruFocus has detected 6 Warning Signs with Pool Corp $POOL.
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Pool Corp (NAS:POOL)
Beneish M-Score
-2.43 (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.

Pool Corp has a M-score of -2.43 suggests that the company is not a manipulator.

POOL' s Beneish M-Score Range Over the Past 10 Years
Min: -3.25   Max: 0.35
Current: -2.43

-3.25
0.35

During the past 13 years, the highest Beneish M-Score of Pool Corp was 0.35. The lowest was -3.25. And the median was -2.40.


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 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 * 0.9537+0.528 * 0.9892+0.404 * 0.9735+0.892 * 1.0717+0.115 * 1.0043
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9948+4.679 * 0.0087-0.327 * 0.9977
=-2.43

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $290 Mil.
Revenue was 546.441 + 445.235 + 691.429 + 918.889 = $2,602 Mil.
Gross Profit was 153.621 + 127.777 + 199.551 + 270.736 = $752 Mil.
Total Current Assets was $967 Mil.
Total Assets was $1,281 Mil.
Property, Plant and Equipment(Net PPE) was $97 Mil.
Depreciation, Depletion and Amortization(DDA) was $23 Mil.
Selling, General & Admin. Expense(SGA) was $494 Mil.
Total Current Liabilities was $525 Mil.
Long-Term Debt was $480 Mil.
Net Income was 22.281 + 2.615 + 44.534 + 85.435 = $155 Mil.
Non Operating Income was 0 + -28.962 + 0 + 0 = $-29 Mil.
Cash Flow from Operations was -32.424 + 22.208 + 156.927 + 25.996 = $173 Mil.
Accounts Receivable was $284 Mil.
Revenue was 515.25 + 415.075 + 645.779 + 851.855 = $2,428 Mil.
Gross Profit was 143.023 + 118.295 + 184.288 + 248.26 = $694 Mil.
Total Current Assets was $908 Mil.
Total Assets was $1,193 Mil.
Property, Plant and Equipment(Net PPE) was $78 Mil.
Depreciation, Depletion and Amortization(DDA) was $18 Mil.
Selling, General & Admin. Expense(SGA) was $464 Mil.
Total Current Liabilities was $494 Mil.
Long-Term Debt was $444 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)
=(290.019 / 2601.994) / (283.758 / 2427.959)
=0.11146029 / 0.116871
=0.9537

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)
=(693.866 / 2427.959) / (751.685 / 2601.994)
=0.2857816 / 0.28888806
=0.9892

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 - (967.052 + 97.14) / 1280.869) / (1 - (907.674 + 78.21) / 1193.241)
=0.16916406 / 0.17377629
=0.9735

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
=2601.994 / 2427.959
=1.0717

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))
=(18.474 / (18.474 + 78.21)) / (22.824 / (22.824 + 97.14))
=0.19107608 / 0.19025708
=1.0043

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)
=(494.358 / 2601.994) / (463.713 / 2427.959)
=0.18999198 / 0.19098881
=0.9948

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)
=((480.442 + 524.685) / 1280.869) / ((444.461 + 494.071) / 1193.241)
=0.78472272 / 0.78654019
=0.9977

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
=(154.865 - -28.962 - 172.707) / 1280.869
=0.0087

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 -2.43 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 local exchange's currency.

Pool Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.87682.76110.96581.00550.96840.72380.15431.14870.96570.9552
GMI 1.02740.95270.9891.00010.98521.02081.02140.99281.00160.9918
AQI 0.97251.0431.02231.02420.84330.9550.96130.9490.97250.9978
SGI 1.00970.9250.86331.0481.11131.08961.06431.08021.05191.0879
DEPI 0.95591.00261.0770.99631.25690.99030.99320.99361.10130.9547
SGAI 1.0551.0891.04690.97720.98490.94180.96260.98810.9610.9709
LVGI 1.1540.9480.91550.90721.09170.9981.00981.10490.98691.0918
TATA -0.0028-0.0437-0.1266-0.0499-0.004-0.0475-0.00940.0043-0.00170.0126
M-score -2.66-1.14-3.19-2.62-2.50-2.87-3.25-2.31-2.46-2.42

Pool Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.14871.04450.98451.0090.96571.12141.01340.97170.95520.9537
GMI 0.99280.99430.99771.00341.00160.99910.99490.9910.99180.9892
AQI 0.9490.96420.9630.9640.97250.92721.00850.98440.99780.9735
SGI 1.08021.08271.05551.05141.05191.05991.08751.0931.08791.0717
DEPI 0.99361.04071.0521.07131.10131.07241.07431.01440.95471.0043
SGAI 0.98810.97650.97130.95860.9610.95480.96020.96660.97090.9948
LVGI 1.10491.03781.02310.99460.98691.06321.00841.01291.09180.9977
TATA 0.00430.02620.0161-0.0255-0.0017-0.0097-0.0243-0.04460.01260.0087
M-score -2.31-2.26-2.38-2.54-2.46-2.39-2.49-2.64-2.42-2.43
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