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GuruFocus has detected 2 Warning Signs with Barnes & Noble Inc $BKS.
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Barnes & Noble Inc (NYSE:BKS)
Beneish M-Score
-2.95 (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.

Barnes & Noble Inc has a M-score of -2.95 suggests that the company is not a manipulator.

BKS' s Beneish M-Score Range Over the Past 10 Years
Min: -3.31   Max: -1.64
Current: -2.95

-3.31
-1.64

During the past 13 years, the highest Beneish M-Score of Barnes & Noble Inc was -1.64. The lowest was -3.31. And the median was -2.68.


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 Barnes & Noble 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 * 0.8242+0.528 * 1.0241+0.404 * 1.0277+0.892 * 0.9353+0.115 * 1.0503
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9449+4.679 * -0.0637-0.327 * 0.9843
=-2.95

* 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 $16 Mil.
Revenue was 821.22 + 1300.908 + 858.548 + 913.882 = $3,895 Mil.
Gross Profit was 242.487 + 436.801 + 255.375 + 277.539 = $1,212 Mil.
Total Current Assets was $1,128 Mil.
Total Assets was $1,933 Mil.
Property, Plant and Equipment(Net PPE) was $276 Mil.
Depreciation, Depletion and Amortization(DDA) was $120 Mil.
Selling, General & Admin. Expense(SGA) was $1,040 Mil.
Total Current Liabilities was $1,108 Mil.
Long-Term Debt was $65 Mil.
Net Income was -13.428 + 70.276 + -20.409 + -14.416 = $22 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was -13.18 + 210.173 + -79.373 + 27.623 = $145 Mil.
Accounts Receivable was $21 Mil.
Revenue was 876.684 + 1413.947 + 894.654 + 978.559 = $4,164 Mil.
Gross Profit was 265.758 + 491.655 + 269.786 + 300.098 = $1,327 Mil.
Total Current Assets was $1,178 Mil.
Total Assets was $2,013 Mil.
Property, Plant and Equipment(Net PPE) was $299 Mil.
Depreciation, Depletion and Amortization(DDA) was $139 Mil.
Selling, General & Admin. Expense(SGA) was $1,177 Mil.
Total Current Liabilities was $1,194 Mil.
Long-Term Debt was $47 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)
=(16.189 / 3894.558) / (21 / 4163.844)
=0.00415683 / 0.00504342
=0.8242

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)
=(1327.297 / 4163.844) / (1212.202 / 3894.558)
=0.31876723 / 0.31125535
=1.0241

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 - (1128.012 + 276.122) / 1932.921) / (1 - (1178.39 + 298.58) / 2012.782)
=0.27356886 / 0.26620469
=1.0277

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
=3894.558 / 4163.844
=0.9353

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))
=(139.138 / (139.138 + 298.58)) / (119.837 / (119.837 + 276.122))
=0.31787132 / 0.30265002
=1.0503

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)
=(1040.007 / 3894.558) / (1176.778 / 4163.844)
=0.26704109 / 0.28261818
=0.9449

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)
=((64.9 + 1108.267) / 1932.921) / ((47.2 + 1193.871) / 2012.782)
=0.60693996 / 0.61659484
=0.9843

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
=(22.023 - 0 - 145.243) / 1932.921
=-0.0637

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.

Barnes & Noble Inc has a M-score of -2.95 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.

Barnes & Noble Inc Annual Data

Jan08Jan09Apr10Apr11Apr12Apr13Apr14Apr15Apr16Apr17
DSRI 1.08590.76340.5761.44911.10110.79341.15270.2821.52380.8242
GMI 1.02680.98111.07071.12150.95661.09450.80250.98010.98031.0241
AQI 0.96521.06271.91171.00460.95280.97221.02241.23480.71521.0277
SGI 1.02840.94571.1471.20481.01840.95930.67751.13840.78940.9353
DEPI 1.00970.98970.87480.81050.93210.97211.08350.86430.95581.0503
SGAI 1.00911.05510.98270.9691.04831.0041.1340.9321.09160.9449
LVGI 1.05011.00731.15281.06311.05660.79821.01350.97241.30290.9843
TATA -0.0919-0.1027-0.0247-0.0745-0.0108-0.0733-0.09130.012-0.1094-0.0637
M-score -2.82-3.22-2.51-2.20-2.50-2.95-3.17-2.87-2.94-2.95

Barnes & Noble Inc Quarterly Data

Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17Apr17
DSRI 0.39730.2820.75110.55290.88811.52381.25370.9561.0790.8242
GMI 0.77570.98011.01160.9781.04410.98030.98051.02551.0371.0241
AQI 1.15041.23481.01270.8010.81510.71520.90761.06651.11021.0277
SGI 0.62151.13841.10490.93981.06580.78940.81710.9620.94110.9353
DEPI 1.15240.86431.12980.75130.81730.95580.7270.98621.03231.0503
SGAI 1.22340.9320.92040.99180.92881.09161.1170.99910.99620.9449
LVGI 0.95140.97241.00131.231.11941.30291.21821.07421.05730.9843
TATA 0.01760.012-0.0453-0.0357-0.0602-0.1094-0.0829-0.0765-0.0529-0.0637
M-score -3.35-2.87-2.79-3.31-2.91-2.94-2.97-2.90-2.66-2.95
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