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GuruFocus has detected 3 Warning Signs with Ennis Inc $EBF.
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Ennis Inc (NYSE:EBF)
Beneish M-Score
-3.27 (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.

Ennis Inc has a M-score of -3.27 suggests that the company is not a manipulator.

EBF' s Beneish M-Score Range Over the Past 10 Years
Min: -3.7   Max: -1.73
Current: -3.27

-3.7
-1.73

During the past 13 years, the highest Beneish M-Score of Ennis Inc was -1.73. The lowest was -3.70. And the median was -2.63.


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 Ennis 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 * 1.1057+0.528 * 1.0347+0.404 * 0.9203+0.892 * 0.9247+0.115 * 0.9714
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0387+4.679 * -0.1765-0.327 * 0.8971
=-3.27

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

This Year (Feb17) TTM:Last Year (Feb16) TTM:
Accounts Receivable was $37.4 Mil.
Revenue was 86.572 + 88.66 + 91.246 + 90.41 = $356.9 Mil.
Gross Profit was 24.926 + 25.292 + 27.038 + 26.694 = $104.0 Mil.
Total Current Assets was $149.3 Mil.
Total Assets was $324.3 Mil.
Property, Plant and Equipment(Net PPE) was $50.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.6 Mil.
Selling, General & Admin. Expense(SGA) was $63.1 Mil.
Total Current Liabilities was $30.0 Mil.
Long-Term Debt was $30.0 Mil.
Net Income was 6.134 + 5.74 + 6.784 + -16.878 = $1.8 Mil.
Non Operating Income was 0.029 + 0.088 + 0.011 + -0.007 = $0.1 Mil.
Cash Flow from Operations was 16.327 + 13.482 + 14.031 + 15.047 = $58.9 Mil.
Accounts Receivable was $36.5 Mil.
Revenue was 91.206 + 97.516 + 100.455 + 96.769 = $385.9 Mil.
Gross Profit was 25.264 + 29.719 + 31.363 + 29.964 = $116.3 Mil.
Total Current Assets was $175.8 Mil.
Total Assets was $390.0 Mil.
Property, Plant and Equipment(Net PPE) was $50.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.4 Mil.
Selling, General & Admin. Expense(SGA) was $65.7 Mil.
Total Current Liabilities was $40.4 Mil.
Long-Term Debt was $40.0 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)
=(37.368 / 356.888) / (36.546 / 385.946)
=0.10470512 / 0.094692
=1.1057

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)
=(116.31 / 385.946) / (103.95 / 356.888)
=0.3013634 / 0.29126785
=1.0347

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 - (149.25 + 49.995) / 324.285) / (1 - (175.841 + 50.791) / 390.044)
=0.38558675 / 0.41895786
=0.9203

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
=356.888 / 385.946
=0.9247

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))
=(12.353 / (12.353 + 50.791)) / (12.607 / (12.607 + 49.995))
=0.19563221 / 0.20138334
=0.9714

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)
=(63.147 / 356.888) / (65.743 / 385.946)
=0.17693786 / 0.17034248
=1.0387

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)
=((30 + 29.968) / 324.285) / ((40 + 40.4) / 390.044)
=0.18492376 / 0.20613059
=0.8971

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
=(1.78 - 0.121 - 58.887) / 324.285
=-0.1765

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.

Ennis Inc has a M-score of -3.27 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.

Ennis Inc Annual Data

Feb08Feb09Feb10Feb11Feb12Feb13Feb14Feb15Feb16Feb17
DSRI 1.46370.83131.12380.95961.07170.99021.04291.40750.5731.1057
GMI 0.99841.01760.93990.93041.11281.08480.87790.87631.00381.0347
AQI 0.94850.87411.0140.90030.96071.05761.01440.7381.32020.9203
SGI 1.04430.95650.88651.06230.941.03191.01670.70121.01460.9247
DEPI 1.06671.07981.25361.46850.93730.85190.9451.24870.54530.9714
SGAI 1.02191.16131.0041.02651.00381.02791.01780.9981.06811.0387
LVGI 0.96110.99050.76960.9681.28620.771.35371.17820.63670.8971
TATA 0.0282-0.1773-0.10880.02540.0128-0.0505-0.0363-0.2404-0.1306-0.1765
M-score -1.89-3.56-2.90-2.36-2.47-2.58-2.78-3.70-3.28-3.27

Ennis Inc Quarterly Data

Nov14Feb15May15Aug15Nov15Feb16May16Aug16Nov16Feb17
DSRI 0.95451.40751.57881.82662.08920.5730.51220.45860.42141.1057
GMI 1.05580.87630.80590.7140.61491.00381.09591.2311.41581.0347
AQI 0.66870.7380.76950.79071.11591.32020.9761.05961.04570.9203
SGI 1.07150.70120.61630.50660.4111.01461.12991.30151.53760.9247
DEPI 0.80161.24871.42221.56291.78150.54530.49580.45740.40780.9714
SGAI 0.96650.9981.0331.11641.15011.06811.05981.02581.01251.0387
LVGI 1.25681.17821.05560.94220.65270.63670.57140.6840.8190.8971
TATA -0.2435-0.2404-0.2859-0.3203-0.1403-0.1306-0.1697-0.1546-0.1576-0.1765
M-score -3.80-3.70-3.80-3.83-2.64-3.28-3.49-3.25-3.04-3.27
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