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GuruFocus has detected 6 Warning Signs with Penn National Gaming Inc $PENN.
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Penn National Gaming Inc (NAS:PENN)
Beneish M-Score
-2.74 (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.

Penn National Gaming Inc has a M-score of -2.74 suggests that the company is not a manipulator.

PENN' s Beneish M-Score Range Over the Past 10 Years
Min: -8.41   Max: -0.47
Current: -2.74

-8.41
-0.47

During the past 13 years, the highest Beneish M-Score of Penn National Gaming Inc was -0.47. The lowest was -8.41. And the median was -2.55.


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 Penn National Gaming 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 * 1.0098+0.528 * 0.9891+0.404 * 0.9822+0.892 * 1.0421+0.115 * 0.9077
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0626+4.679 * -0.0604-0.327 * 0.9757
=-2.74

* 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 $49 Mil.
Revenue was 776.224 + 742.91 + 765.597 + 769.422 = $3,054 Mil.
Gross Profit was 343.096 + 323.128 + 320.853 + 328.348 = $1,315 Mil.
Total Current Assets was $417 Mil.
Total Assets was $4,947 Mil.
Property, Plant and Equipment(Net PPE) was $2,774 Mil.
Depreciation, Depletion and Amortization(DDA) was $275 Mil.
Selling, General & Admin. Expense(SGA) was $498 Mil.
Total Current Liabilities was $467 Mil.
Long-Term Debt was $4,829 Mil.
Net Income was 5.104 + 5.032 + 46.535 + 34.035 = $91 Mil.
Non Operating Income was -20.635 + 2.974 + 3.909 + 3.592 = $-10 Mil.
Cash Flow from Operations was 66.82 + 93.302 + 121.858 + 117.641 = $400 Mil.
Accounts Receivable was $47 Mil.
Revenue was 756.451 + 733.967 + 739.297 + 700.956 = $2,931 Mil.
Gross Profit was 323.055 + 305.004 + 315.927 + 304.537 = $1,249 Mil.
Total Current Assets was $340 Mil.
Total Assets was $5,129 Mil.
Property, Plant and Equipment(Net PPE) was $2,935 Mil.
Depreciation, Depletion and Amortization(DDA) was $262 Mil.
Selling, General & Admin. Expense(SGA) was $450 Mil.
Total Current Liabilities was $530 Mil.
Long-Term Debt was $5,097 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)
=(49.49 / 3054.153) / (47.029 / 2930.671)
=0.01620417 / 0.01604718
=1.0098

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)
=(1248.523 / 2930.671) / (1315.425 / 3054.153)
=0.4260195 / 0.43070043
=0.9891

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 - (417.117 + 2774.323) / 4947.04) / (1 - (340.42 + 2935.27) / 5128.688)
=0.35487888 / 0.36130059
=0.9822

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
=3054.153 / 2930.671
=1.0421

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))
=(262.112 / (262.112 + 2935.27)) / (275.43 / (275.43 + 2774.323))
=0.08197707 / 0.09031223
=0.9077

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)
=(497.949 / 3054.153) / (449.681 / 2930.671)
=0.16303997 / 0.1534396
=1.0626

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)
=((4828.901 + 467.122) / 4947.04) / ((5097.165 + 530.274) / 5128.688)
=1.0705438 / 1.09724729
=0.9757

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
=(90.706 - -10.16 - 399.621) / 4947.04
=-0.0604

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.

Penn National Gaming Inc has a M-score of -2.74 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.

Penn National Gaming Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.990.77661.09540.91791.11840.9880.94660.84940.99091.2805
GMI 1.01833.91640.27270.98280.98860.97440.97640.99021.01261.0042
AQI 0.98480.79480.86731.1020.91271.03490.77121.05830.99071.0149
SGI 1.05890.99440.97781.03791.11510.98051.03310.93261.09571.0691
DEPI 1.03580.99570.91340.98141.14751.02260.74651.22561.13420.913
SGAI 0.9492-0.7919-1.36820.96870.89841.2410.99610.92750.91881.0029
LVGI 0.95710.79261.05540.98730.9381.05970.57213.56370.97370.9664
TATA -0.0523-0.1492-0.127-0.1193-0.0681-0.0541-0.2218-0.0988-0.0815-0.062
M-score -2.65-1.56-3.06-3.04-2.57-2.82-3.53-3.92-2.74-2.44

Penn National Gaming Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.84940.77210.61240.85770.99091.0250.92580.96161.28051.0098
GMI 0.99020.99090.99841.00451.01261.01991.02041.02281.00420.9891
AQI 1.05830.65120.65420.63410.99071.0461.06391.15631.01490.9822
SGI 0.93260.99731.06011.1281.09571.12131.12651.09791.06911.0421
DEPI 1.22564.06544.06793.49641.13421.07751.01720.90720.9130.9077
SGAI 0.92750.93490.94160.89670.91880.88120.84460.89661.00291.0626
LVGI 3.56370.5820.58850.62350.97372.97152.92552.5760.96640.9757
TATA -0.0988-0.1044-0.1045-0.0956-0.0815-0.0752-0.0683-0.0614-0.062-0.0604
M-score -3.92-2.83-2.92-2.66-2.74-3.29-3.32-3.15-2.44-2.74
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