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Zale Corp (NYSE:ZLC)
Beneish M-Score
0.00 (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.

Zale Corp has a M-score of -2.63 suggests that the company is not a manipulator.

ZLC' s 10-Year Beneish M-Score Range
Min: 0   Max: 0
Current: 0

During the past 13 years, the highest Beneish M-Score of Zale Corp was 0.00. The lowest was 0.00. And the median was 0.00.


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 Zale Corp 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+0.528 * 0.9713+0.404 * 0.9889+0.892 * 0.9992+0.115 * 1.0189
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.016+4.679 * -0.0283-0.327 * 0.9776
=-2.63

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jan14) TTM:Last Year (Jan13) TTM:
Accounts Receivable was $0 Mil.
Revenue was 656.449 + 362.615 + 417.089 + 442.708 = $1,879 Mil.
Gross Profit was 347.619 + 193.788 + 221.582 + 232.847 = $996 Mil.
Total Current Assets was $936 Mil.
Total Assets was $1,281 Mil.
Property, Plant and Equipment(Net PPE) was $104 Mil.
Depreciation, Depletion and Amortization(DDA) was $31 Mil.
Selling, General & Admin. Expense(SGA) was $919 Mil.
Total Current Liabilities was $466 Mil.
Long-Term Debt was $445 Mil.
Net Income was 50.786 + -27.306 + -7.984 + 5.052 = $21 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 80.563 + -86.945 + 47.481 + 15.697 = $57 Mil.
Accounts Receivable was $0 Mil.
Revenue was 670.752 + 357.468 + 406.963 + 445.17 = $1,880 Mil.
Gross Profit was 339.651 + 190.335 + 209.885 + 228.193 = $968 Mil.
Total Current Assets was $901 Mil.
Total Assets was $1,257 Mil.
Property, Plant and Equipment(Net PPE) was $117 Mil.
Depreciation, Depletion and Amortization(DDA) was $36 Mil.
Selling, General & Admin. Expense(SGA) was $906 Mil.
Total Current Liabilities was $441 Mil.
Long-Term Debt was $474 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)
=(0 / 1878.861) / (0 / 1880.353)
=0 / 0
=1

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)
=(193.788 / 1880.353) / (347.619 / 1878.861)
=0.51483099 / 0.53002111
=0.9713

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 - (935.786 + 103.714) / 1280.704) / (1 - (901.289 + 116.56) / 1257.296)
=0.18833704 / 0.190446
=0.9889

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
=1878.861 / 1880.353
=0.9992

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))
=(36.182 / (36.182 + 116.56)) / (31.415 / (31.415 + 103.714))
=0.23688311 / 0.23248155
=1.0189

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)
=(919.495 / 1878.861) / (905.721 / 1880.353)
=0.48938958 / 0.48167605
=1.016

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)
=((445.267 + 466.053) / 1280.704) / ((473.975 + 441.215) / 1257.296)
=0.71157738 / 0.72790337
=0.9776

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
=(20.548 - 0 - 56.796) / 1280.704
=-0.0283

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.

Zale Corp has a M-score of -2.63 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 own currency.

Zale Corp Annual Data

Jul04Jul05Jul06Jul07Jul08Jul09Jul10Jul11Jul12Jul13
DSRI 1111111111
GMI 0.97740.99661.02050.97831.04551.05010.92720.99730.98090.9875
AQI 0.82821.00630.97270.95951.27431.31671.3031.0961.0040.993
SGI 1.04171.03411.02350.99920.87730.83240.90821.07811.07131.0113
DEPI 0.97930.99840.99251.04921.00780.84790.89450.99180.95331.0002
SGAI 0.8871.00731.08850.98531.03321.14931.03670.90650.97981.0041
LVGI 1.01810.87551.11710.91.2341.17741.07061.16161.06050.9664
TATA -0.0477-0.0389-0.02590.016-0.0762-0.1561-0.1182-0.05040.0089-0.034
M-score -2.74-2.59-2.63-2.39-2.89-3.31-3.07-2.65-2.40-2.63

Zale Corp Quarterly Data

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
DSRI 1111111111
GMI 0.99340.99550.98730.98090.99310.9940.99290.98750.98610.9713
AQI 1.12511.13151.08271.0040.97860.99610.97590.9931.03380.9889
SGI 1.09441.08781.07421.07131.06051.04241.02221.01131.01060.9992
DEPI 0.95160.96840.9510.95330.99050.96880.97051.00020.9891.0189
SGAI 0.90760.92610.94040.97530.98830.97850.98791.00410.99981.016
LVGI 1.061.0891.09071.06051.05081.03531.03280.96640.96760.9776
TATA -0.0214-0.020.00410.0089-0.00690.01180.0012-0.034-0.0189-0.0283
M-score -2.46-2.46-2.39-2.40-2.49-2.40-2.48-2.63-2.54-2.63
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