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GuruFocus has detected 3 Warning Signs with Best Buy Co Inc $BBY.
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Best Buy Co Inc (NYSE:BBY)
Beneish M-Score
-3.06 (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.

Best Buy Co Inc has a M-score of -3.06 suggests that the company is not a manipulator.

BBY' s Beneish M-Score Range Over the Past 10 Years
Min: -4.05   Max: 0.08
Current: -3.06

-4.05
0.08

During the past 13 years, the highest Beneish M-Score of Best Buy Co Inc was 0.08. The lowest was -4.05. And the median was -2.64.


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 Best Buy Co 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 * 0.9199+0.528 * 1.0007+0.404 * 0.783+0.892 * 1.0019+0.115 * 0.9885
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9888+4.679 * -0.0892-0.327 * 1.0093
=-3.06

* 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 $1,011 Mil.
Revenue was 8528 + 13482 + 8945 + 8533 = $39,488 Mil.
Gross Profit was 2022 + 3030 + 2203 + 2062 = $9,317 Mil.
Total Current Assets was $9,656 Mil.
Total Assets was $12,955 Mil.
Property, Plant and Equipment(Net PPE) was $2,287 Mil.
Depreciation, Depletion and Amortization(DDA) was $653 Mil.
Selling, General & Admin. Expense(SGA) was $7,525 Mil.
Total Current Liabilities was $6,470 Mil.
Long-Term Debt was $1,302 Mil.
Net Income was 188 + 607 + 194 + 198 = $1,187 Mil.
Non Operating Income was 11 + 10 + 8 + 8 = $37 Mil.
Cash Flow from Operations was 243 + 1150 + 107 + 805 = $2,305 Mil.
Accounts Receivable was $1,097 Mil.
Revenue was 8443 + 13623 + 8819 + 8528 = $39,413 Mil.
Gross Profit was 2145 + 2951 + 2112 + 2098 = $9,306 Mil.
Total Current Assets was $9,282 Mil.
Total Assets was $12,901 Mil.
Property, Plant and Equipment(Net PPE) was $2,332 Mil.
Depreciation, Depletion and Amortization(DDA) was $656 Mil.
Selling, General & Admin. Expense(SGA) was $7,596 Mil.
Total Current Liabilities was $6,334 Mil.
Long-Term Debt was $1,334 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)
=(1011 / 39488) / (1097 / 39413)
=0.02560271 / 0.02783346
=0.9199

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)
=(9306 / 39413) / (9317 / 39488)
=0.23611499 / 0.2359451
=1.0007

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 - (9656 + 2287) / 12955) / (1 - (9282 + 2332) / 12901)
=0.07811656 / 0.09975971
=0.783

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
=39488 / 39413
=1.0019

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))
=(656 / (656 + 2332)) / (653 / (653 + 2287))
=0.21954485 / 0.22210884
=0.9885

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)
=(7525 / 39488) / (7596 / 39413)
=0.19056422 / 0.19272829
=0.9888

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)
=((1302 + 6470) / 12955) / ((1334 + 6334) / 12901)
=0.59992281 / 0.59437253
=1.0093

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
=(1187 - 37 - 2305) / 12955
=-0.0892

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.

Best Buy Co Inc has a M-score of -3.06 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.

Best Buy Co Inc Annual Data

Feb08Feb09Feb10Feb11Feb12Jan13Jan14Jan15Jan16Jan17
DSRI 0.89953.02520.97961.1490.96611.42440.47981.02880.92641.1629
GMI 1.02310.97620.99850.97341.01371.04241.04111.01880.96450.9705
AQI 1.4471.32190.91620.99380.70210.62650.75791.21681.17890.7937
SGI 1.11381.12471.10391.01161.00860.82971.00810.95120.97990.9968
DEPI 0.98940.93490.86140.90990.95191.05510.93880.97191.01610.9859
SGAI 0.97941.08160.99551.03380.98351.05140.93170.95121.0240.9938
LVGI 1.14161.04210.91180.95341.25391.08210.90610.94990.99670.9968
TATA -0.0586-0.0504-0.05150.002-0.2884-0.1131-0.0431-0.0478-0.0325-0.0975
M-score -2.60-0.66-2.67-2.34-4.05-2.93-3.19-2.60-2.67-2.89

Best Buy Co Inc Quarterly Data

Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17Apr17
DSRI 1.02881.20551.07591.06550.92641.11510.90521.08941.16290.9199
GMI 1.01880.99820.95070.93410.96450.96230.97980.98560.97051.0007
AQI 1.21680.86290.95250.98211.17891.26841.19221.14870.79370.783
SGI 0.95120.94760.9480.93410.97990.98870.99811.01570.99681.0019
DEPI 0.97190.92160.89070.92091.01611.03281.02671.00370.98590.9885
SGAI 0.95120.96830.99661.01921.0241.01921.00470.99670.99380.9888
LVGI 0.94990.94960.96470.98110.99671.02631.03321.02610.99681.0093
TATA -0.0478-0.0544-0.0635-0.0465-0.0325-0.0645-0.0973-0.0809-0.0975-0.0892
M-score -2.60-2.64-2.80-2.74-2.67-2.61-2.97-2.72-2.89-3.06
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