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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 & Fragrance Inc was 10000000.00. The lowest was -4.06. And the median was -2.83.
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 & Fragrance 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 * 1.0215||+||0.528 * 0.9868||+||0.404 * 1.1233||+||0.892 * 1.2162||+||0.115 * 0.9417|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0056||+||4.679 * -0.0583||-||0.327 * 1.21|
|This Year (Apr16) TTM:||Last Year (Apr15) TTM:|
|Accounts Receivable was $54 Mil.|
Revenue was 1073.716 + 1268.295 + 910.7 + 876.999 = $4,130 Mil.
Gross Profit was 390.43 + 439.036 + 335.638 + 306.475 = $1,472 Mil.
Total Current Assets was $1,338 Mil.
Total Assets was $2,219 Mil.
Property, Plant and Equipment(Net PPE) was $871 Mil.
Depreciation, Depletion and Amortization(DDA) was $175 Mil.
Selling, General & Admin. Expense(SGA) was $926 Mil.
Total Current Liabilities was $496 Mil.
Long-Term Debt was $0 Mil.
Net Income was 91.976 + 107.823 + 71.07 + 74.169 = $345 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 166.931 + 226.901 + 23.277 + 57.404 = $475 Mil.
|Accounts Receivable was $44 Mil.
Revenue was 868.122 + 1047.641 + 745.722 + 734.236 = $3,396 Mil.
Gross Profit was 303.184 + 349.737 + 281.755 + 259.342 = $1,194 Mil.
Total Current Assets was $1,325 Mil.
Total Assets was $2,078 Mil.
Property, Plant and Equipment(Net PPE) was $745 Mil.
Depreciation, Depletion and Amortization(DDA) was $139 Mil.
Selling, General & Admin. Expense(SGA) was $757 Mil.
Total Current Liabilities was $384 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)|
|=||(54.112 / 4129.71)||/||(43.558 / 3395.721)|
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)|
|=||(1194.018 / 3395.721)||/||(1471.579 / 4129.71)|
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 - (1338.417 + 870.835) / 2218.95)||/||(1 - (1325.201 + 744.665) / 2077.951)|
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))|
|=||(139.258 / (139.258 + 744.665))||/||(174.969 / (174.969 + 870.835))|
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)|
|=||(925.7 / 4129.71)||/||(756.902 / 3395.721)|
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 + 495.734) / 2218.95)||/||((0 + 383.664) / 2077.951)|
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|
|=||(345.038 - 0||-||474.513)||/||2218.95|
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 & Fragrance Inc has a M-score of -2.57 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 & Fragrance Inc Annual Data
Ulta Salon Cosmetics & Fragrance Inc Quarterly Data