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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 10000000.00. The lowest was -4.09. And the median was -3.11.
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 * 0.8918||+||0.528 * 1.0011||+||0.404 * 1.2742||+||0.892 * 1.2057||+||0.115 * 0.9896|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9778||+||4.679 * -0.0483||-||0.327 * 1.0375|
|This Year (Jul15) TTM:||Last Year (Jul14) TTM:|
|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.
Net Income was 74.169 + 66.946 + 87.264 + 59.124 = $288 Mil.
Non Operating Income was 0 + 0.622 + 0 + 0 = $1 Mil.
Cash Flow from Operations was 57.404 + 68.292 + 250.442 + 12.922 = $389 Mil.
|Accounts Receivable was $42 Mil.
Revenue was 734.236 + 713.77 + 868.082 + 618.781 = $2,935 Mil.
Gross Profit was 259.342 + 245.953 + 293.561 + 231.661 = $1,031 Mil.
Total Current Assets was $1,128 Mil.
Total Assets was $1,780 Mil.
Property, Plant and Equipment(Net PPE) was $647 Mil.
Depreciation, Depletion and Amortization(DDA) was $118 Mil.
Selling, General & Admin. Expense(SGA) was $665 Mil.
Total Current Liabilities was $300 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)|
|=||(45.277 / 3538.484)||/||(42.11 / 2934.869)|
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)|
|=||(303.184 / 2934.869)||/||(306.475 / 3538.484)|
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 - (1316.085 + 791.904) / 2115.91)||/||(1 - (1127.693 + 646.89) / 1779.812)|
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))|
|=||(117.908 / (117.908 + 646.89))||/||(146.13 / (146.13 + 791.904))|
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)|
|=||(783.554 / 3538.484)||/||(664.632 / 2934.869)|
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 + 370.214) / 2115.91)||/||((0 + 300.141) / 1779.812)|
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|
|=||(287.503 - 0.622||-||389.06)||/||2115.91|
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 -2.52 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 & Fragrances Inc Annual Data
Ulta Salon Cosmetics & Fragrances Inc Quarterly Data