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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
-2.42 (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 -2.42 suggests that the company is not a manipulator.

POOL' s Beneish M-Score Range Over the Past 10 Years
Min: -3.25   Max: -1.14
Current: -2.42

-3.25
-1.14

During the past 13 years, the highest Beneish M-Score of Pool Corp was -1.14. The lowest was -3.25. And the median was -2.44.


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 * 0.9552+0.528 * 0.9918+0.404 * 0.9978+0.892 * 1.0879+0.115 * 0.9547
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9709+4.679 * 0.0126-0.327 * 1.0918
=-2.42

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

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $19 Mil.
Revenue was 445.235 + 691.429 + 918.889 + 515.25 = $2,571 Mil.
Gross Profit was 127.777 + 199.551 + 270.736 + 143.023 = $741 Mil.
Total Current Assets was $696 Mil.
Total Assets was $994 Mil.
Property, Plant and Equipment(Net PPE) was $83 Mil.
Depreciation, Depletion and Amortization(DDA) was $22 Mil.
Selling, General & Admin. Expense(SGA) was $485 Mil.
Total Current Liabilities was $296 Mil.
Long-Term Debt was $437 Mil.
Net Income was 2.615 + 44.534 + 85.435 + 16.371 = $149 Mil.
Non Operating Income was -28.962 + 0 + 0 + 0 = $-29 Mil.
Cash Flow from Operations was 22.208 + 156.927 + 25.996 + -39.753 = $165 Mil.
Accounts Receivable was $18 Mil.
Revenue was 415.075 + 645.779 + 851.855 + 450.43 = $2,363 Mil.
Gross Profit was 118.295 + 184.288 + 248.26 + 124.801 = $676 Mil.
Total Current Assets was $662 Mil.
Total Assets was $934 Mil.
Property, Plant and Equipment(Net PPE) was $70 Mil.
Depreciation, Depletion and Amortization(DDA) was $17 Mil.
Selling, General & Admin. Expense(SGA) was $459 Mil.
Total Current Liabilities was $305 Mil.
Long-Term Debt was $326 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)
=(18.533 / 2570.803) / (17.835 / 2363.139)
=0.00720903 / 0.00754717
=0.9552

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)
=(675.644 / 2363.139) / (741.087 / 2570.803)
=0.28590955 / 0.28827063
=0.9918

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 - (695.557 + 83.29) / 994.095) / (1 - (661.744 + 69.854) / 934.361)
=0.21652659 / 0.21700713
=0.9978

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
=2570.803 / 2363.139
=1.0879

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))
=(17.388 / (17.388 + 69.854)) / (21.977 / (21.977 + 83.29))
=0.19930767 / 0.20877388
=0.9547

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)
=(485.228 / 2570.803) / (459.422 / 2363.139)
=0.1887457 / 0.19441175
=0.9709

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)
=((436.937 + 296.22) / 994.095) / ((326.345 + 304.845) / 934.361)
=0.73751201 / 0.67553119
=1.0918

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
=(148.955 - -28.962 - 165.378) / 994.095
=0.0126

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 -2.42 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

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.05961.14871.04450.98451.0090.96571.12141.01340.97170.9552
GMI 0.99760.99280.99430.99771.00341.00160.99910.99490.9910.9918
AQI 0.95070.9490.96420.9630.9640.97250.92721.00850.98440.9978
SGI 1.08071.08021.08271.05551.05141.05191.05991.08751.0931.0879
DEPI 0.99260.99361.04071.0521.07131.10131.07241.07431.01440.9547
SGAI 0.98640.98810.97650.97130.95860.9610.95480.96020.96660.9709
LVGI 1.21161.10491.03781.02310.99460.98691.06321.00841.01291.0918
TATA 0.02140.00430.02620.0161-0.0255-0.0017-0.0097-0.0243-0.04460.0126
M-score -2.34-2.31-2.26-2.38-2.54-2.46-2.39-2.49-2.64-2.42
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