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GuruFocus has detected 7 Warning Signs with Ascena Retail Group Inc $ASNA.
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Ascena Retail Group Inc (NAS:ASNA)
Beneish M-Score
-5.38 (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.

Ascena Retail Group Inc has a M-score of -5.38 suggests that the company is not a manipulator.

ASNA' s Beneish M-Score Range Over the Past 10 Years
Min: -5.38   Max: 5.13
Current: -5.38

-5.38
5.13

During the past 13 years, the highest Beneish M-Score of Ascena Retail Group Inc was 5.13. The lowest was -5.38. And the median was -2.71.


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 Ascena Retail Group 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+0.528 * 0.9541+0.404 * 0.6883+0.892 * 1.071+0.115 * 0.3882
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0101+4.679 * -0.3792-0.327 * 1.1492
=-5.38

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

This Year (Apr17) TTM:Last Year (Apr16) TTM:
Accounts Receivable was $0 Mil.
Revenue was 1565.1 + 1748.2 + 1678.4 + 1812.3 = $6,804 Mil.
Gross Profit was 948.4 + 945.8 + 1014 + 1041.3 = $3,950 Mil.
Total Current Assets was $1,181 Mil.
Total Assets was $3,994 Mil.
Property, Plant and Equipment(Net PPE) was $1,495 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,112 Mil.
Selling, General & Admin. Expense(SGA) was $3,392 Mil.
Total Current Liabilities was $898 Mil.
Long-Term Debt was $1,608 Mil.
Net Income was -1030.7 + -35.2 + 14.4 + 13.8 = $-1,038 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was -20.1 + 159 + 56 + 282 = $477 Mil.
Accounts Receivable was $132 Mil.
Revenue was 1669.3 + 1841.8 + 1672 + 1169.8 = $6,353 Mil.
Gross Profit was 1016.7 + 968 + 896.1 + 637.6 = $3,518 Mil.
Total Current Assets was $1,240 Mil.
Total Assets was $5,485 Mil.
Property, Plant and Equipment(Net PPE) was $1,616 Mil.
Depreciation, Depletion and Amortization(DDA) was $321 Mil.
Selling, General & Admin. Expense(SGA) was $3,135 Mil.
Total Current Liabilities was $930 Mil.
Long-Term Debt was $2,064 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 / 6804) / (132.1 / 6352.9)
=0 / 0.02079365
=0

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)
=(3518.4 / 6352.9) / (3949.5 / 6804)
=0.55382581 / 0.58046737
=0.9541

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 - (1181.3 + 1495) / 3994.3) / (1 - (1239.8 + 1615.9) / 5485.2)
=0.32997021 / 0.47938088
=0.6883

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
=6804 / 6352.9
=1.071

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))
=(320.6 / (320.6 + 1615.9)) / (1111.6 / (1111.6 + 1495))
=0.16555642 / 0.42645592
=0.3882

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)
=(3391.6 / 6804) / (3135.1 / 6352.9)
=0.49847149 / 0.49349116
=1.0101

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)
=((1607.6 + 897.9) / 3994.3) / ((2063.9 + 930) / 5485.2)
=0.62726886 / 0.54581419
=1.1492

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
=(-1037.7 - 0 - 476.9) / 3994.3
=-0.3792

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.

Ascena Retail Group Inc has a M-score of -5.38 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.

Ascena Retail Group Inc Annual Data

Jul07Jul08Jul09Jul10Jul11Jul12Jul13Jul14Jul15Jul16
DSRI 1111111.51811.10460.77770.8214
GMI 0.98871.05981.0030.93450.97880.75210.99781.01110.99910.9912
AQI 0.86841.16820.81961.09171.15361.21350.98770.90720.78251.7541
SGI 1.09721.01231.03471.58921.22721.15081.4061.01611.00261.4565
DEPI 0.9921.00881.0021.14030.85481.12910.78141.18470.94440.8715
SGAI 0.99051.02331.02721.02831.00131.51491.04740.99821.06030.992
LVGI 0.89940.88570.97690.67821.29191.48380.61660.93831.43281.4753
TATA -0.0565-0.0702-0.0919-0.057-0.0581-0.066-0.1008-0.0772-0.2291-0.0832
M-score -2.68-2.66-2.95-2.10-2.61-2.93-2.03-2.72-4.00-2.50

Ascena Retail Group Inc Quarterly Data

Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17Apr17
DSRI 110.77771110.8214000
GMI 1.04341.05040.99911.01590.99950.98180.99120.94220.93630.9541
AQI 0.95140.95980.78251.34451.36381.4051.75411.04881.02610.6883
SGI 1.00151.0021.00261.10291.21281.31931.45651.32591.18411.071
DEPI 1.05991.00040.94441.1051.0140.94820.87150.71550.7750.3882
SGAI 0.98140.98091.06031.05351.06621.06770.9921.01681.0161.0101
LVGI 0.91880.92511.43282.01872.30452.19251.47530.8490.85081.1492
TATA -0.0967-0.0969-0.2291-0.1154-0.1315-0.1206-0.0832-0.0962-0.0917-0.3792
M-score -2.89-2.89-4.00-3.11-3.20-3.01-2.50-3.56-3.67-5.38
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