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GuruFocus has detected 7 Warning Signs with Guess? Inc $GES.
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Guess? Inc (NYSE:GES)
Beneish M-Score
-2.69 (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.

Guess? Inc has a M-score of -2.69 suggests that the company is not a manipulator.

GES' s Beneish M-Score Range Over the Past 10 Years
Min: -3.9   Max: -0.78
Current: -2.69

-3.9
-0.78

During the past 13 years, the highest Beneish M-Score of Guess? Inc was -0.78. The lowest was -3.90. And the median was -2.77.


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 Guess? 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 * 1.0303+0.528 * 1.0449+0.404 * 0.9994+0.892 * 1.0206+0.115 * 0.9532
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0024+4.679 * -0.0544-0.327 * 1.0699
=-2.69

* 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 $198 Mil.
Revenue was 458.581 + 679.273 + 536.321 + 544.959 = $2,219 Mil.
Gross Profit was 144.642 + 236.407 + 180.242 + 185.632 = $747 Mil.
Total Current Assets was $979 Mil.
Total Assets was $1,472 Mil.
Property, Plant and Equipment(Net PPE) was $245 Mil.
Depreciation, Depletion and Amortization(DDA) was $68 Mil.
Selling, General & Admin. Expense(SGA) was $684 Mil.
Total Current Liabilities was $325 Mil.
Long-Term Debt was $23 Mil.
Net Income was -21.293 + 6.567 + 9.103 + 32.269 = $27 Mil.
Non Operating Income was 2.432 + 4.492 + 0.125 + 27.39 = $34 Mil.
Cash Flow from Operations was -29.947 + 102.231 + -13.167 + 13.103 = $72 Mil.
Accounts Receivable was $189 Mil.
Revenue was 448.815 + 658.259 + 520.964 + 546.264 = $2,174 Mil.
Gross Profit was 142.759 + 240.164 + 183.664 + 198.117 = $765 Mil.
Total Current Assets was $1,026 Mil.
Total Assets was $1,553 Mil.
Property, Plant and Equipment(Net PPE) was $266 Mil.
Depreciation, Depletion and Amortization(DDA) was $69 Mil.
Selling, General & Admin. Expense(SGA) was $668 Mil.
Total Current Liabilities was $319 Mil.
Long-Term Debt was $24 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)
=(198.494 / 2219.134) / (188.769 / 2174.302)
=0.0894466 / 0.08681821
=1.0303

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)
=(764.704 / 2174.302) / (746.923 / 2219.134)
=0.35170091 / 0.3365831
=1.0449

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 - (979.406 + 245.131) / 1472.124) / (1 - (1025.65 + 265.818) / 1552.776)
=0.16818352 / 0.16828441
=0.9994

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
=2219.134 / 2174.302
=1.0206

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))
=(69.034 / (69.034 + 265.818)) / (67.65 / (67.65 + 245.131))
=0.20616272 / 0.21628552
=0.9532

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)
=(683.609 / 2219.134) / (668.162 / 2174.302)
=0.30805215 / 0.30729954
=1.0024

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)
=((23.322 + 324.566) / 1472.124) / ((23.539 + 319.422) / 1552.776)
=0.23631705 / 0.22086959
=1.0699

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
=(26.646 - 34.439 - 72.22) / 1472.124
=-0.0544

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.

Guess? Inc has a M-score of -2.69 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.

Guess? Inc Annual Data

Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15Jan16Jan17
DSRI 1.32520.8621.06371.08110.87920.88970.870.96841.06991.0454
GMI 0.9751.02810.99641.01651.01161.07161.05671.05821.00491.0593
AQI 0.87790.88030.94351.2471.02691.1520.86721.22911.03061.0041
SGI 1.4391.19631.01681.16861.08070.9890.96660.94080.91171.0023
DEPI 1.04310.83381.07391.13780.95570.91950.94110.86691.13860.9768
SGAI 1.01020.98490.99831.00341.03631.05580.96731.02861.01511.0246
LVGI 0.93680.83190.8291.12810.88720.9840.93240.89911.11251.1232
TATA 0.0063-0.003-0.0777-0.0435-0.0542-0.056-0.1047-0.0483-0.0679-0.0519
M-score -1.80-2.44-2.73-2.38-2.73-2.77-3.12-2.65-2.82-2.69

Guess? Inc Quarterly Data

Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17Apr17
DSRI 0.96840.77520.88650.94571.06991.18811.26441.31141.04541.0303
GMI 1.05821.03991.01281.01331.00491.02661.04781.05311.05931.0449
AQI 1.22911.0991.12731.12041.03061.12641.07531.04531.00410.9994
SGI 0.94080.93340.91990.9010.91170.91590.940.97571.00231.0206
DEPI 0.86690.86080.89020.96951.13861.19871.22441.19380.97680.9532
SGAI 1.02861.01981.00530.9731.01511.0421.03461.041.02461.0024
LVGI 0.89910.96740.97471.1061.11251.19741.1191.13431.12321.0699
TATA -0.0483-0.0546-0.0669-0.0978-0.0679-0.0576-0.041-0.0295-0.0519-0.0544
M-score -2.65-2.95-2.92-3.05-2.82-2.64-2.45-2.34-2.69-2.69
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