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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 Regis Corp was -1.01. The lowest was -4.07. And the median was -2.78.
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|
|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
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)|
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)|
|=||(763.024 / 1817.446)||/||(719.605 / 1745.357)|
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 - (370.863 + 165.644) / 1030.227)||/||(1 - (363.289 + 196.714) / 1054.832)|
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))|
|=||(63.284 / (63.284 + 196.714))||/||(54.737 / (54.737 + 165.644))|
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)|
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)|
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|
|=||(4.54 - 0||-||70.056)||/||1030.227|
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.
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
Regis Corp Annual Data
Regis Corp Quarterly Data