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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 Steiner Leisure Ltd was 0.42. The lowest was -4.58. And the median was -2.59.
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 Steiner Leisure Ltd 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 * 1.123||+||0.528 * 0.9585||+||0.404 * 0.792||+||0.892 * 1.0031||+||0.115 * 0.8956|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0897||+||4.679 * -0.4073||-||0.327 * 1.553|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $87.9 Mil.|
Revenue was 216.104 + 217.778 + 219.677 + 209.263 = $862.8 Mil.
Gross Profit was 48.13 + 47.825 + 48.664 + 44.704 = $189.3 Mil.
Total Current Assets was $198.2 Mil.
Total Assets was $546.4 Mil.
Property, Plant and Equipment(Net PPE) was $100.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $23.5 Mil.
Selling, General & Admin. Expense(SGA) was $139.4 Mil.
Total Current Liabilities was $213.9 Mil.
Long-Term Debt was $108.1 Mil.
Net Income was 8.112 + -185.847 + 12.106 + 8.283 = $-157.3 Mil.
Non Operating Income was 0.278 + 0.382 + 0.202 + 0.326 = $1.2 Mil.
Cash Flow from Operations was 10.729 + 27.395 + 5.756 + 20.144 = $64.0 Mil.
|Accounts Receivable was $78.0 Mil.
Revenue was 216.736 + 220.964 + 214.831 + 207.653 = $860.2 Mil.
Gross Profit was 44.911 + 46.129 + 44.316 + 45.553 = $180.9 Mil.
Total Current Assets was $217.8 Mil.
Total Assets was $770.4 Mil.
Property, Plant and Equipment(Net PPE) was $111.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $22.8 Mil.
Selling, General & Admin. Expense(SGA) was $127.5 Mil.
Total Current Liabilities was $199.2 Mil.
Long-Term Debt was $93.1 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)|
|=||(87.855 / 862.822)||/||(77.99 / 860.184)|
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)|
|=||(47.825 / 860.184)||/||(48.13 / 862.822)|
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 - (198.22 + 100.272) / 546.396)||/||(1 - (217.819 + 111.251) / 770.382)|
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))|
|=||(22.768 / (22.768 + 111.251))||/||(23.474 / (23.474 + 100.272))|
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)|
|=||(139.393 / 862.822)||/||(127.533 / 860.184)|
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)|
|=||((108.119 + 213.896) / 546.396)||/||((93.139 + 199.206) / 770.382)|
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|
|=||(-157.346 - 1.188||-||64.024)||/||546.396|
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.
Steiner Leisure Ltd has a M-score of -4.58 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
Steiner Leisure Ltd Annual Data
Steiner Leisure Ltd Quarterly Data