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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 Stanley Furniture Co Inc was 3.09. The lowest was -5.63. And the median was -2.66.
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 Stanley Furniture Co Inc 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 * 1.0749||+||0.528 * -2.2764||+||0.404 * 4.512||+||0.892 * 0.971||+||0.115 * 0.9121|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0318||+||4.679 * -0.2764||-||0.327 * 1.0538|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $5.85 Mil.|
Revenue was 16.02 + 13.928 + 24.038 + 21.891 = $75.88 Mil.
Gross Profit was 2.778 + 2.916 + -12.026 + 1.393 = $-4.94 Mil.
Total Current Assets was $39.17 Mil.
Total Assets was $59.71 Mil.
Property, Plant and Equipment(Net PPE) was $1.99 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.53 Mil.
Selling, General & Admin. Expense(SGA) was $18.13 Mil.
Total Current Liabilities was $9.69 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -4.158 + -2.264 + -19.06 + -4.41 = $-29.89 Mil.
Non Operating Income was -2.51 + 0.024 + -0.019 + 0.331 = $-2.17 Mil.
Cash Flow from Operations was -1.554 + -1.251 + -6.285 + -2.126 = $-11.22 Mil.
|Accounts Receivable was $5.61 Mil.
Revenue was 13.265 + 14.661 + 24.166 + 26.052 = $78.14 Mil.
Gross Profit was 2.553 + 3.461 + 2.18 + 3.385 = $11.58 Mil.
Total Current Assets was $86.98 Mil.
Total Assets was $95.49 Mil.
Property, Plant and Equipment(Net PPE) was $1.94 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.46 Mil.
Selling, General & Admin. Expense(SGA) was $18.10 Mil.
Total Current Liabilities was $14.71 Mil.
Long-Term Debt was $0.00 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)|
|=||(5.853 / 75.877)||/||(5.608 / 78.144)|
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)|
|=||(2.916 / 78.144)||/||(2.778 / 75.877)|
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 - (39.172 + 1.99) / 59.707)||/||(1 - (86.977 + 1.935) / 95.485)|
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))|
|=||(0.461 / (0.461 + 1.935))||/||(0.532 / (0.532 + 1.99))|
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)|
|=||(18.132 / 75.877)||/||(18.098 / 78.144)|
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)|
|=||((0 + 9.693) / 59.707)||/||((0 + 14.71) / 95.485)|
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|
|=||(-29.892 - -2.174||-||-11.216)||/||59.707|
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.
Stanley Furniture Co Inc has a M-score of -4.07 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
Stanley Furniture Co Inc Annual Data
Stanley Furniture Co Inc Quarterly Data