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GuruFocus has detected 6 Warning Signs with Pier 1 Imports Inc $PIR.
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Pier 1 Imports Inc (NYSE:PIR)
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.

Pier 1 Imports Inc has a M-score of -2.95 suggests that the company is not a manipulator.

PIR' s Beneish M-Score Range Over the Past 10 Years
Min: -3.59   Max: -1.32
Current: -2.95

-3.59
-1.32

During the past 13 years, the highest Beneish M-Score of Pier 1 Imports Inc was -1.32. The lowest was -3.59. 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 Pier 1 Imports 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 * 1.0489+0.528 * 0.9769+0.404 * 1.103+0.892 * 0.9663+0.115 * 0.8825
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0512+4.679 * -0.1015-0.327 * 1.0661
=-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 (Feb17) TTM:Last Year (Feb16) TTM:
Accounts Receivable was $23 Mil.
Revenue was 528.352 + 475.901 + 405.823 + 418.37 = $1,828 Mil.
Gross Profit was 206.912 + 196.393 + 145.036 + 148.967 = $697 Mil.
Total Current Assets was $610 Mil.
Total Assets was $843 Mil.
Property, Plant and Equipment(Net PPE) was $191 Mil.
Depreciation, Depletion and Amortization(DDA) was $61 Mil.
Selling, General & Admin. Expense(SGA) was $588 Mil.
Total Current Liabilities was $291 Mil.
Long-Term Debt was $199 Mil.
Net Income was 26.641 + 13.577 + -4.069 + -6.02 = $30 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 110.665 + 58.678 + -87.128 + 33.523 = $116 Mil.
Accounts Receivable was $23 Mil.
Revenue was 542.325 + 478.047 + 434.992 + 436.866 = $1,892 Mil.
Gross Profit was 196.894 + 183.993 + 154.554 + 169.539 = $705 Mil.
Total Current Assets was $575 Mil.
Total Assets was $819 Mil.
Property, Plant and Equipment(Net PPE) was $208 Mil.
Depreciation, Depletion and Amortization(DDA) was $56 Mil.
Selling, General & Admin. Expense(SGA) was $579 Mil.
Total Current Liabilities was $247 Mil.
Long-Term Debt was $200 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)
=(22.945 / 1828.446) / (22.639 / 1892.23)
=0.01254891 / 0.01196419
=1.0489

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)
=(704.98 / 1892.23) / (697.308 / 1828.446)
=0.3725657 / 0.38136647
=0.9769

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 - (609.988 + 191.476) / 843.082) / (1 - (574.894 + 207.633) / 819.191)
=0.04936412 / 0.04475635
=1.103

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
=1828.446 / 1892.23
=0.9663

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))
=(55.83 / (55.83 + 207.633)) / (60.504 / (60.504 + 191.476))
=0.21190831 / 0.24011429
=0.8825

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)
=(587.967 / 1828.446) / (578.815 / 1892.23)
=0.32156651 / 0.3058904
=1.0512

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)
=((199.077 + 291.303) / 843.082) / ((200.255 + 246.687) / 819.191)
=0.58165161 / 0.54558949
=1.0661

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
=(30.129 - 0 - 115.738) / 843.082
=-0.1015

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.

Pier 1 Imports 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.

Pier 1 Imports Inc Annual Data

Feb08Feb09Feb10Feb11Feb12Feb13Feb14Feb15Feb16Feb17
DSRI 1.1580.86970.85620.93151.00081.23251.051.13560.76681.0489
GMI 1.00431.05640.80660.85790.93670.97421.02031.04761.09450.9769
AQI 1.11811.06550.92780.69662.33590.65960.97940.79471.03411.103
SGI 0.93140.87360.97741.08181.09821.11171.05081.0521.00410.9663
DEPI 0.91640.91760.92711.09011.49131.13121.11260.97320.88590.8825
SGAI 0.80711.0640.95020.94791.00180.97131.02181.02650.9691.051
LVGI 1.09461.13890.6250.82990.93630.97081.14061.57461.01081.0661
TATA -0.0181-0.1524-0.0639-0.06490.01730.0063-0.06430.0104-0.1519-0.1015
M-score -2.44-3.44-2.94-2.90-1.73-2.26-2.72-2.51-3.35-2.95

Pier 1 Imports Inc Quarterly Data

Nov14Feb15May15Aug15Nov15Feb16May16Aug16Nov16Feb17
DSRI 1.19781.13561.13430.99950.8810.76681.00330.84410.99411.0489
GMI 1.051.04761.04111.04971.06841.09451.10861.08571.03920.9769
AQI 0.86840.79470.86950.89130.9481.03411.02090.93140.88151.103
SGI 1.02771.0521.04781.04361.02941.00410.9850.96130.96350.9663
DEPI 1.16750.97320.90920.84310.83630.88590.88210.87910.86080.8825
SGAI 1.0411.02651.04041.01970.99770.9690.96670.9971.02641.0512
LVGI 1.64931.57461.03421.07821.0461.01081.03120.97771.02691.0661
TATA 0.03560.01040.0127-0.0482-0.1133-0.1519-0.1685-0.1512-0.1212-0.1015
M-score -2.33-2.51-2.31-2.73-3.11-3.35-3.23-3.35-3.14-2.95
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