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GuruFocus has detected 3 Warning Signs with FirstCash Inc $FCFS.
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FirstCash Inc (NYSE:FCFS)
Beneish M-Score
-1.29 (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.

FirstCash Inc has a M-score of -1.29 signals that the company is a manipulator.

FCFS' s Beneish M-Score Range Over the Past 10 Years
Min: -4.33   Max: 10.58
Current: -1.29

-4.33
10.58

During the past 13 years, the highest Beneish M-Score of FirstCash Inc was 10.58. The lowest was -4.33. And the median was -2.51.


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 FirstCash 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 * 1.4299+0.528 * 1.0047+0.404 * 1.1148+0.892 * 1.9005+0.115 * 0.9002
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0321+4.679 * -0.0378-0.327 * 0.5704
=-1.29

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

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $393 Mil.
Revenue was 447.576 + 462.042 + 261.153 + 181.979 = $1,353 Mil.
Gross Profit was 242.9 + 254.115 + 147.364 + 101.461 = $746 Mil.
Total Current Assets was $789 Mil.
Total Assets was $2,044 Mil.
Property, Plant and Equipment(Net PPE) was $237 Mil.
Depreciation, Depletion and Amortization(DDA) was $41 Mil.
Selling, General & Admin. Expense(SGA) was $522 Mil.
Total Current Liabilities was $118 Mil.
Long-Term Debt was $334 Mil.
Net Income was 32.645 + 36.692 + -1.412 + 11.673 = $80 Mil.
Non Operating Income was 5.786 + 6.346 + 4.935 + 4.102 = $21 Mil.
Cash Flow from Operations was 63.865 + 56.38 + 0.901 + 14.497 = $136 Mil.
Accounts Receivable was $145 Mil.
Revenue was 183.203 + 191.424 + 169.532 + 167.623 = $712 Mil.
Gross Profit was 101.863 + 102.925 + 95.442 + 94.046 = $394 Mil.
Total Current Assets was $296 Mil.
Total Assets was $754 Mil.
Property, Plant and Equipment(Net PPE) was $121 Mil.
Depreciation, Depletion and Amortization(DDA) was $18 Mil.
Selling, General & Admin. Expense(SGA) was $266 Mil.
Total Current Liabilities was $56 Mil.
Long-Term Debt was $236 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)
=(393.154 / 1352.75) / (144.675 / 711.782)
=0.29063315 / 0.20325746
=1.4299

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)
=(394.276 / 711.782) / (745.84 / 1352.75)
=0.55392803 / 0.55135095
=1.0047

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 - (788.798 + 237.258) / 2043.554) / (1 - (296.45 + 120.712) / 753.885)
=0.4979061 / 0.44665035
=1.1148

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
=1352.75 / 711.782
=1.9005

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))
=(18.329 / (18.329 + 120.712)) / (40.702 / (40.702 + 237.258))
=0.13182443 / 0.14643114
=0.9002

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)
=(521.854 / 1352.75) / (266.04 / 711.782)
=0.38577269 / 0.37376613
=1.0321

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)
=((333.721 + 117.75) / 2043.554) / ((236.037 + 55.929) / 753.885)
=0.22092443 / 0.38728188
=0.5704

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
=(79.598 - 21.169 - 135.643) / 2043.554
=-0.0378

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.

FirstCash Inc has a M-score of -1.29 signals that the company is likely to 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.

FirstCash Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.53440.98141.2391.12050.82611.23010.9940.95021.02652.0829
GMI 1.10171.0780.90660.99821.03750.99341.01330.99451.01290.9991
AQI 0.99370.96730.77550.82460.88791.66271.16091.0660.99241.1331
SGI 1.39991.1180.97981.15651.22171.14991.11611.07870.98841.5447
DEPI 0.95850.95391.2091.23311.16841.06910.98150.9340.9681.1643
SGAI 0.87310.97781.03260.99340.90431.00741.03891.01421.03961.0591
LVGI 1.73631.52080.37930.66450.94292.82111.27931.03331.07790.702
TATA 0.0671-0.3008-0.141-0.0475-0.0066-0.0169-0.0395-0.0354-0.0629-0.0262
M-score -2.41-3.94-2.86-2.39-2.44-2.54-2.59-2.62-2.79-0.96

FirstCash Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.95020.93130.96560.90741.02651.11141.06492.86572.08291.4299
GMI 0.99450.99660.99161.00281.01291.01221.01061.00690.99911.0047
AQI 1.0661.07111.10321.04190.99241.05841.02411.10911.13311.1148
SGI 1.07871.07221.041.02970.98840.98981.00651.14221.54471.9005
DEPI 0.9340.93370.93180.91230.9681.03311.04711.72521.16430.9002
SGAI 1.01421.0121.02641.02331.03961.04621.041.05911.05911.0321
LVGI 1.03331.0241.12551.09971.07791.08041.00740.76180.7020.5704
TATA -0.0354-0.0529-0.0466-0.0654-0.0629-0.0652-0.0676-0.0186-0.0262-0.0378
M-score -2.62-2.72-2.71-2.87-2.79-2.69-2.72-0.52-0.96-1.29
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