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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 Zumiez Inc was -1.34. The lowest was -3.30. And the median was -2.71.
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 Zumiez 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 * 1.3106||+||0.528 * 1.0216||+||0.404 * 0.8157||+||0.892 * 1.1204||+||0.115 * 0.9762|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0182||+||4.679 * -0.0936||-||0.327 * 1.1787|
|This Year (Jan15) TTM:||Last Year (Jan14) TTM:|
|Accounts Receivable was $7.8 Mil.|
Revenue was 258.569 + 213.341 + 176.709 + 162.932 = $811.6 Mil.
Gross Profit was 97.778 + 77.86 + 60.912 + 50.533 = $287.1 Mil.
Total Current Assets was $279.8 Mil.
Total Assets was $493.7 Mil.
Property, Plant and Equipment(Net PPE) was $135.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $29.2 Mil.
Selling, General & Admin. Expense(SGA) was $215.5 Mil.
Total Current Liabilities was $81.4 Mil.
Long-Term Debt was $4.4 Mil.
Net Income was 17.513 + 15.727 + 7.456 + 2.496 = $43.2 Mil.
Non Operating Income was -0.626 + -0.22 + 0.203 + 0.086 = $-0.6 Mil.
Cash Flow from Operations was 55.502 + 3.92 + 13.945 + 16.57 = $89.9 Mil.
|Accounts Receivable was $5.3 Mil.
Revenue was 226.838 + 191.145 + 157.858 + 148.496 = $724.3 Mil.
Gross Profit was 87.879 + 70.789 + 55.12 + 47.972 = $261.8 Mil.
Total Current Assets was $229.8 Mil.
Total Assets was $443.4 Mil.
Property, Plant and Equipment(Net PPE) was $127.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $26.6 Mil.
Selling, General & Admin. Expense(SGA) was $188.9 Mil.
Total Current Liabilities was $61.4 Mil.
Long-Term Debt was $4.1 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)|
|=||(7.781 / 811.551)||/||(5.299 / 724.337)|
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)|
|=||(77.86 / 724.337)||/||(97.778 / 811.551)|
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 - (279.763 + 135.642) / 493.705)||/||(1 - (229.846 + 127.343) / 443.403)|
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))|
|=||(26.596 / (26.596 + 127.343))||/||(29.167 / (29.167 + 135.642))|
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)|
|=||(215.512 / 811.551)||/||(188.918 / 724.337)|
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)|
|=||((4.443 + 81.447) / 493.705)||/||((4.068 + 61.374) / 443.403)|
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|
|=||(43.192 - -0.557||-||89.937)||/||493.705|
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.
Zumiez Inc has a M-score of -2.65 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
Zumiez Inc Annual Data
Zumiez Inc Quarterly Data