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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 Ulta Salon Cosmetics & Fragrances Inc was -2.53. The lowest was -4.09. And the median was -3.13.
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 Ulta Salon Cosmetics & Fragrances 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 * 0.8809||+||0.528 * 1.0037||+||0.404 * 1.0446||+||0.892 * 1.1954||+||0.115 * 0.9505|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9831||+||4.679 * -0.0696||-||0.327 * 1.0264|
|This Year (Oct14) TTM:||Last Year (Oct13) TTM:|
|Accounts Receivable was $49 Mil.|
Revenue was 745.722 + 734.236 + 713.77 + 868.082 = $3,062 Mil.
Gross Profit was 281.755 + 259.342 + 245.953 + 293.561 = $1,081 Mil.
Total Current Assets was $1,231 Mil.
Total Assets was $1,923 Mil.
Property, Plant and Equipment(Net PPE) was $687 Mil.
Depreciation, Depletion and Amortization(DDA) was $125 Mil.
Selling, General & Admin. Expense(SGA) was $694 Mil.
Total Current Liabilities was $370 Mil.
Long-Term Debt was $0 Mil.
Net Income was 59.124 + 60.794 + 49.953 + 70.682 = $241 Mil.
Non Operating Income was 0 + 0.418 + 0 + 0.236 = $1 Mil.
Cash Flow from Operations was 12.922 + 59.535 + 73.693 + 227.592 = $374 Mil.
|Accounts Receivable was $47 Mil.
Revenue was 618.781 + 600.998 + 582.712 + 758.835 = $2,561 Mil.
Gross Profit was 231.661 + 212.077 + 203.949 + 259.644 = $907 Mil.
Total Current Assets was $941 Mil.
Total Assets was $1,535 Mil.
Property, Plant and Equipment(Net PPE) was $590 Mil.
Depreciation, Depletion and Amortization(DDA) was $101 Mil.
Selling, General & Admin. Expense(SGA) was $590 Mil.
Total Current Liabilities was $288 Mil.
Long-Term Debt was $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)|
|=||(49.399 / 3061.81)||/||(46.911 / 2561.326)|
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)|
|=||(259.342 / 2561.326)||/||(281.755 / 3061.81)|
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 - (1230.742 + 686.898) / 1922.759)||/||(1 - (941.302 + 590.132) / 1535.347)|
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))|
|=||(100.973 / (100.973 + 590.132))||/||(124.766 / (124.766 + 686.898))|
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)|
|=||(693.525 / 3061.81)||/||(590.115 / 2561.326)|
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 + 369.711) / 1922.759)||/||((0 + 287.614) / 1535.347)|
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|
|=||(240.553 - 0.654||-||373.742)||/||1922.759|
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.
Ulta Salon Cosmetics & Fragrances Inc has a M-score of -2.73 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
Ulta Salon Cosmetics & Fragrances Inc Annual Data
Ulta Salon Cosmetics & Fragrances Inc Quarterly Data