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GuruFocus has detected 4 Warning Signs with Ulta Beauty Inc $ULTA.
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Ulta Beauty Inc (NAS:ULTA)
Beneish M-Score
-2.56 (As of Today)

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.

Ulta Beauty Inc has a M-score of -2.56 suggests that the company is not a manipulator.

ULTA' s Beneish M-Score Range Over the Past 10 Years
Min: -4.06   Max: 10000000
Current: -2.56

-4.06
10000000

During the past 13 years, the highest Beneish M-Score of Ulta Beauty Inc was 10000000.00. The lowest was -4.06. And the median was -2.82.


Definition

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 Beauty 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 * 1.0517+0.528 * 0.9677+0.404 * 1.2524+0.892 * 1.2265+0.115 * 0.9428
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0344+4.679 * -0.0676-0.327 * 1.2551
=-2.56

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Oct16) TTM:Last Year (Oct15) TTM:
Accounts Receivable was $66 Mil.
Revenue was 1131.232 + 1069.215 + 1073.716 + 1268.295 = $4,542 Mil.
Gross Profit was 427.053 + 384.838 + 390.43 + 439.036 = $1,641 Mil.
Total Current Assets was $1,538 Mil.
Total Assets was $2,551 Mil.
Property, Plant and Equipment(Net PPE) was $1,002 Mil.
Depreciation, Depletion and Amortization(DDA) was $197 Mil.
Selling, General & Admin. Expense(SGA) was $1,041 Mil.
Total Current Liabilities was $655 Mil.
Long-Term Debt was $0 Mil.
Net Income was 87.562 + 90.004 + 91.976 + 107.823 = $377 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 103.388 + 52.699 + 166.931 + 226.901 = $550 Mil.
Accounts Receivable was $51 Mil.
Revenue was 910.7 + 876.999 + 868.122 + 1047.641 = $3,703 Mil.
Gross Profit was 335.638 + 306.475 + 303.184 + 349.737 = $1,295 Mil.
Total Current Assets was $1,388 Mil.
Total Assets was $2,240 Mil.
Property, Plant and Equipment(Net PPE) was $844 Mil.
Depreciation, Depletion and Amortization(DDA) was $155 Mil.
Selling, General & Admin. Expense(SGA) was $821 Mil.
Total Current Liabilities was $458 Mil.
Long-Term Debt was $0 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(65.708 / 4542.458) / (50.939 / 3703.462)
=0.0144653 / 0.01375443
=1.0517

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(1295.034 / 3703.462) / (1641.357 / 4542.458)
=0.349682 / 0.36133675
=0.9677

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (1538.465 + 1001.938) / 2551.201) / (1 - (1388.19 + 844.238) / 2239.998)
=0.00423252 / 0.00337947
=1.2524

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=4542.458 / 3703.462
=1.2265

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))
=(154.76 / (154.76 + 844.238)) / (197.012 / (197.012 + 1001.938))
=0.15491523 / 0.16432045
=0.9428

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)
=(1041.277 / 4542.458) / (820.756 / 3703.462)
=0.22923206 / 0.22161858
=1.0344

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 + 654.64) / 2551.201) / ((0 + 457.976) / 2239.998)
=0.25660071 / 0.20445375
=1.2551

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(377.365 - 0 - 549.919) / 2551.201
=-0.0676

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 Beauty Inc has a M-score of -2.56 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Ulta Beauty Inc Annual Data

Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15Jan16
DSRI 0.92490.74420.94220.91831.0237
GMI 1.00161.02851.00151.0050.9941
AQI 0.658201.19211.06451.2801
SGI 1.2081.18911.20281.21371.2106
DEPI 1.08270.95651.02010.97540.9523
SGAI 1.00530.99961.01290.97520.9985
LVGI 0.99980.90630.96031.08920.9795
TATA -0.046-0.0878-0.0779-0.0703-0.025
M-score -2.71-3.32-2.63-2.69-2.28

Ulta Beauty Inc Quarterly Data

Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16
DSRI 1.13320.88090.91831.34490.89180.85251.02371.02151.01261.0517
GMI 1.00181.00371.0050.99811.00111.00930.99410.98680.97810.9677
AQI 1.12111.04461.06451.37681.27421.26941.28011.12331.17111.2524
SGI 1.19881.19541.21371.21211.20571.20961.21061.21621.22141.2265
DEPI 0.97980.95050.97540.99280.98960.99230.95230.94170.92660.9428
SGAI 0.9980.98310.97520.9720.97780.97840.99851.00561.02271.0344
LVGI 1.00861.02641.08921.03741.03751.06330.97951.211.22011.2551
TATA -0.0843-0.0695-0.0705-0.0563-0.048-0.0446-0.025-0.0583-0.0472-0.0676
M-score -2.53-2.73-2.69-2.09-2.52-2.54-2.28-2.57-2.52-2.56
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