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GuruFocus has detected 3 Warning Signs with Ulta Beauty Inc $ULTA.
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Ulta Beauty Inc (NAS:ULTA)
Beneish M-Score
-2.58 (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.

Ulta Beauty Inc has a M-score of -2.58 suggests that the company is not a manipulator.

ULTA' s Beneish M-Score Range Over the Past 10 Years
Min: -3.32   Max: -2.28
Current: -2.58

-3.32
-2.28

During the past 13 years, the highest Beneish M-Score of Ulta Beauty Inc was -2.28. The lowest was -3.32. And the median was -2.70.


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 Ulta Beauty 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 * 1.1023+0.528 * 0.9802+0.404 * 1.211+0.892 * 1.2372+0.115 * 0.9414
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0057+4.679 * -0.0888-0.327 * 1.1679
=-2.58

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

This Year (Jan17) TTM:Last Year (Jan16) TTM:
Accounts Receivable was $89 Mil.
Revenue was 1580.574 + 1131.232 + 1069.215 + 1073.716 = $4,855 Mil.
Gross Profit was 544.908 + 427.053 + 384.838 + 390.43 = $1,747 Mil.
Total Current Assets was $1,536 Mil.
Total Assets was $2,552 Mil.
Property, Plant and Equipment(Net PPE) was $1,004 Mil.
Depreciation, Depletion and Amortization(DDA) was $210 Mil.
Selling, General & Admin. Expense(SGA) was $1,092 Mil.
Total Current Liabilities was $529 Mil.
Long-Term Debt was $0 Mil.
Net Income was 140.218 + 87.562 + 90.004 + 91.976 = $410 Mil.
Non Operating Income was 1.78 + 0 + 0 + 0 = $2 Mil.
Cash Flow from Operations was 311.667 + 103.388 + 52.699 + 166.931 = $635 Mil.
Accounts Receivable was $65 Mil.
Revenue was 1268.295 + 910.7 + 876.999 + 868.122 = $3,924 Mil.
Gross Profit was 439.036 + 335.638 + 306.475 + 303.184 = $1,384 Mil.
Total Current Assets was $1,375 Mil.
Total Assets was $2,231 Mil.
Property, Plant and Equipment(Net PPE) was $848 Mil.
Depreciation, Depletion and Amortization(DDA) was $165 Mil.
Selling, General & Admin. Expense(SGA) was $878 Mil.
Total Current Liabilities was $396 Mil.
Long-Term Debt was $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)
=(88.631 / 4854.737) / (64.992 / 3924.116)
=0.0182566 / 0.0165622
=1.1023

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)
=(1384.333 / 3924.116) / (1747.229 / 4854.737)
=0.35277576 / 0.35990189
=0.9802

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 - (1536.237 + 1004.358) / 2551.878) / (1 - (1375.173 + 847.6) / 2230.918)
=0.00442145 / 0.00365096
=1.211

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
=4854.737 / 3924.116
=1.2372

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))
=(165.049 / (165.049 + 847.6)) / (210.295 / (210.295 + 1004.358))
=0.16298737 / 0.17313175
=0.9414

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)
=(1092.405 / 4854.737) / (878.036 / 3924.116)
=0.22501837 / 0.22375383
=1.0057

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)
=((0 + 529.343) / 2551.878) / ((0 + 396.227) / 2230.918)
=0.20743272 / 0.17760716
=1.1679

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
=(409.76 - 1.78 - 634.685) / 2551.878
=-0.0888

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.

Ulta Beauty Inc has a M-score of -2.58 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.

Ulta Beauty Inc Annual Data

Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15Jan16Jan17
DSRI 0.92490.74420.94220.91831.02371.1023
GMI 1.00161.02851.00151.0050.99410.9802
AQI 0.658201.19211.06451.28011.211
SGI 1.2081.18911.20281.21371.21061.2372
DEPI 1.08270.95651.02010.97540.95230.9414
SGAI 1.00530.99961.01290.97520.99851.0057
LVGI 0.99980.90630.96031.08920.97951.1679
TATA -0.046-0.0878-0.0779-0.0712-0.0261-0.0888
M-score -2.71-3.32-2.63-2.70-2.28-2.58

Ulta Beauty Inc Quarterly Data

Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17
DSRI 0.88090.91831.34490.89180.85251.02371.02151.01261.05171.1023
GMI 1.00371.0050.99811.00111.00930.99410.98680.97810.96770.9802
AQI 1.04461.06451.37681.27421.26941.28011.12331.17111.25241.211
SGI 1.19541.21371.21211.20571.20961.21061.21621.22141.22651.2372
DEPI 0.95050.97540.99280.98960.99230.95230.94170.92660.94280.9414
SGAI 0.98310.97520.9720.97780.97840.99851.00561.02271.03441.0057
LVGI 1.02641.08921.03741.03751.06330.97951.211.22011.25511.1679
TATA -0.0697-0.0716-0.0574-0.0488-0.0454-0.0261-0.0594-0.0482-0.0685-0.0888
M-score -2.73-2.70-2.10-2.52-2.55-2.28-2.58-2.52-2.56-2.58
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