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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 * 1.0126||+||0.528 * 0.9781||+||0.404 * 1.1711||+||0.892 * 1.2214||+||0.115 * 0.9266|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0227||+||4.679 * -0.0472||-||0.327 * 1.2201|
|This Year (Jul16) TTM:||Last Year (Jul15) TTM:|
|Accounts Receivable was $56 Mil.|
Revenue was 1069.215 + 1073.716 + 1268.295 + 910.7 = $4,322 Mil.
Gross Profit was 384.838 + 390.43 + 439.036 + 335.638 = $1,550 Mil.
Total Current Assets was $1,376 Mil.
Total Assets was $2,306 Mil.
Property, Plant and Equipment(Net PPE) was $920 Mil.
Depreciation, Depletion and Amortization(DDA) was $186 Mil.
Selling, General & Admin. Expense(SGA) was $979 Mil.
Total Current Liabilities was $492 Mil.
Long-Term Debt was $0 Mil.
Net Income was 90.004 + 91.976 + 107.823 + 71.07 = $361 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 52.699 + 166.931 + 226.901 + 23.277 = $470 Mil.
|Accounts Receivable was $45 Mil.
Revenue was 876.999 + 868.122 + 1047.641 + 745.722 = $3,538 Mil.
Gross Profit was 306.475 + 303.184 + 349.737 + 281.755 = $1,241 Mil.
Total Current Assets was $1,316 Mil.
Total Assets was $2,116 Mil.
Property, Plant and Equipment(Net PPE) was $792 Mil.
Depreciation, Depletion and Amortization(DDA) was $146 Mil.
Selling, General & Admin. Expense(SGA) was $784 Mil.
Total Current Liabilities was $370 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)|
|=||(55.998 / 4321.926)||/||(45.277 / 3538.484)|
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)|
|=||(1241.151 / 3538.484)||/||(1549.942 / 4321.926)|
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 - (1376.082 + 919.597) / 2305.788)||/||(1 - (1316.085 + 791.904) / 2115.91)|
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))|
|=||(146.13 / (146.13 + 791.904))||/||(185.863 / (185.863 + 919.597))|
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)|
|=||(978.754 / 4321.926)||/||(783.554 / 3538.484)|
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 + 492.245) / 2305.788)||/||((0 + 370.214) / 2115.91)|
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|
|=||(360.873 - 0||-||469.808)||/||2305.788|
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 -2.52 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