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GuruFocus has detected 2 Warning Signs with Regis Corp $RGS.
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Regis Corp (NYSE:RGS)
Beneish M-Score
-2.64 (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.

Regis Corp has a M-score of -2.64 suggests that the company is not a manipulator.

RGS' s Beneish M-Score Range Over the Past 10 Years
Min: -4.07   Max: -1.01
Current: -2.64

-4.07
-1.01

During the past 13 years, the highest Beneish M-Score of Regis Corp was -1.01. The lowest was -4.07. And the median was -2.75.


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 Regis 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 * 1.1555+0.528 * 1.0183+0.404 * 1.0216+0.892 * 0.9603+0.115 * 0.98
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9667+4.679 * -0.0636-0.327 * 0.9677
=-2.64

* 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 $31 Mil.
Revenue was 424.043 + 431.042 + 447.707 + 442.565 = $1,745 Mil.
Gross Profit was 169.202 + 179.8 + 188.084 + 182.519 = $720 Mil.
Total Current Assets was $371 Mil.
Total Assets was $1,030 Mil.
Property, Plant and Equipment(Net PPE) was $166 Mil.
Depreciation, Depletion and Amortization(DDA) was $55 Mil.
Selling, General & Admin. Expense(SGA) was $632 Mil.
Total Current Liabilities was $187 Mil.
Long-Term Debt was $120 Mil.
Net Income was -2.219 + 3.281 + 5.562 + -2.084 = $5 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 15.275 + 12.33 + 16.14 + 26.311 = $70 Mil.
Accounts Receivable was $28 Mil.
Revenue was 450.467 + 450.13 + 462.889 + 453.96 = $1,817 Mil.
Gross Profit was 183.411 + 189.326 + 198.274 + 192.013 = $763 Mil.
Total Current Assets was $363 Mil.
Total Assets was $1,055 Mil.
Property, Plant and Equipment(Net PPE) was $197 Mil.
Depreciation, Depletion and Amortization(DDA) was $63 Mil.
Selling, General & Admin. Expense(SGA) was $681 Mil.
Total Current Liabilities was $205 Mil.
Long-Term Debt was $120 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)
=(30.742 / 1745.357) / (27.705 / 1817.446)
=0.01761359 / 0.01524392
=1.1555

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)
=(763.024 / 1817.446) / (719.605 / 1745.357)
=0.41983311 / 0.41229674
=1.0183

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 - (370.863 + 165.644) / 1030.227) / (1 - (363.289 + 196.714) / 1054.832)
=0.47923419 / 0.46910693
=1.0216

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
=1745.357 / 1817.446
=0.9603

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))
=(63.284 / (63.284 + 196.714)) / (54.737 / (54.737 + 165.644))
=0.24340187 / 0.24837441
=0.98

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)
=(631.956 / 1745.357) / (680.698 / 1817.446)
=0.36207836 / 0.37453547
=0.9667

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)
=((120.103 + 186.973) / 1030.227) / ((120.06 + 204.861) / 1054.832)
=0.29806635 / 0.30803104
=0.9677

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
=(4.54 - 0 - 70.056) / 1030.227
=-0.0636

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.

Regis Corp has a M-score of -2.64 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.

Regis Corp Annual Data

Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15Jun16
DSRI 1.00260.53521.41010.52942.20211.49650.97960.51240.78621.0284
GMI 0.99281.02541.0080.99151.01550.99691.06171.0091.00121.015
AQI 0.98091.12141.03620.97171.04420.91110.75480.89471.17181.077
SGI 1.08051.04270.88720.97060.92440.97340.95120.93740.97090.9747
DEPI 0.94720.96260.8781.02411.00510.82591.26350.90350.98171.0049
SGAI 1.00760.98810.99421.03261.07210.97571.00540.98811.0140.9821
LVGI 1.02960.96990.96750.76080.8651.09490.83681.31570.80991.0512
TATA -0.0768-0.0614-0.1651-0.0779-0.1318-0.1704-0.0283-0.1803-0.11-0.064
M-score -2.79-3.09-2.96-3.24-2.00-2.93-2.66-3.98-3.09-2.75

Regis Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.42430.63681.01470.78621.13741.04931.01631.02840.97881.1555
GMI 1.00611.00010.99441.00120.99941.00041.00711.0151.01651.0183
AQI 1.03181.13151.1361.17181.02961.07091.07441.0771.05951.0216
SGI 0.95280.96490.97260.97090.96530.96880.97190.97470.9720.9603
DEPI 0.93720.97660.99430.98170.97320.96470.96641.00490.99370.98
SGAI 0.99281.0021.00931.0141.00881.00661.00130.98210.97870.9667
LVGI 1.01640.81330.80360.80991.11981.10931.11131.05120.96620.9677
TATA -0.2192-0.1352-0.1331-0.11-0.1029-0.0863-0.0773-0.064-0.0605-0.0636
M-score -4.07-3.37-3.00-3.09-2.90-2.88-2.86-2.75-2.76-2.64
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