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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 -3.43. And the median was -2.57.
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 * 1.0595||+||0.528 * 1.0416||+||0.404 * 1.038||+||0.892 * 1.0249||+||0.115 * 0.9266|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.6011||+||4.679 * -0.0232||-||0.327 * 0.9997|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $81.5 Mil.|
Revenue was 219.677 + 209.263 + 216.736 + 220.964 = $866.6 Mil.
Gross Profit was 48.664 + 44.704 + 44.911 + 46.129 = $184.4 Mil.
Total Current Assets was $195.2 Mil.
Total Assets was $751.0 Mil.
Property, Plant and Equipment(Net PPE) was $110.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $24.2 Mil.
Selling, General & Admin. Expense(SGA) was $78.4 Mil.
Total Current Liabilities was $198.5 Mil.
Long-Term Debt was $96.1 Mil.
Net Income was 12.106 + 8.283 + 7.361 + 12.955 = $40.7 Mil.
Non Operating Income was 0.202 + 0.326 + 0.143 + 0.459 = $1.1 Mil.
Cash Flow from Operations was 5.756 + 20.144 + -9.817 + 40.948 = $57.0 Mil.
|Accounts Receivable was $75.0 Mil.
Revenue was 214.831 + 207.653 + 212.014 + 211.079 = $845.6 Mil.
Gross Profit was 44.316 + 45.553 + 50.223 + 47.318 = $187.4 Mil.
Total Current Assets was $224.4 Mil.
Total Assets was $772.2 Mil.
Property, Plant and Equipment(Net PPE) was $106.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.3 Mil.
Selling, General & Admin. Expense(SGA) was $127.2 Mil.
Total Current Liabilities was $199.0 Mil.
Long-Term Debt was $104.0 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)|
|=||(81.467 / 866.64)||/||(75.021 / 845.577)|
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)|
|=||(44.704 / 845.577)||/||(48.664 / 866.64)|
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 - (195.205 + 110.317) / 750.966)||/||(1 - (224.373 + 106.553) / 772.19)|
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))|
|=||(21.281 / (21.281 + 106.553))||/||(24.159 / (24.159 + 110.317))|
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)|
|=||(78.36 / 866.64)||/||(127.196 / 845.577)|
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)|
|=||((96.081 + 198.478) / 750.966)||/||((103.966 + 199) / 772.19)|
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|
|=||(40.705 - 1.13||-||57.031)||/||750.966|
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 -2.41 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