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Cato Corp (NYSE:CATO)
Beneish M-Score
-2.87 (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.

Cato Corp has a M-score of -2.87 suggests that the company is not a manipulator.

CATO' s 10-Year Beneish M-Score Range
Min: -3.42   Max: -2.42
Current: -2.87

-3.42
-2.42

During the past 13 years, the highest Beneish M-Score of Cato Corp was -2.42. The lowest was -3.42. And the median was -2.87.


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 Cato Corp 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 * 1.028+0.528 * 0.9993+0.404 * 0.9904+0.892 * 0.9964+0.115 * 1.0501
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0516+4.679 * -0.0821-0.327 * 1.0628
=-2.87

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Apr14) TTM:Last Year (Apr13) TTM:
Accounts Receivable was $41.0 Mil.
Revenue was 284.732 + 217.574 + 201.043 + 231.718 = $935.1 Mil.
Gross Profit was 120.369 + 76.966 + 72.256 + 86.768 = $356.4 Mil.
Total Current Assets was $429.4 Mil.
Total Assets was $583.2 Mil.
Property, Plant and Equipment(Net PPE) was $143.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.8 Mil.
Selling, General & Admin. Expense(SGA) was $254.0 Mil.
Total Current Liabilities was $179.6 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 30.006 + 3.823 + 4.885 + 14.775 = $53.5 Mil.
Non Operating Income was 0 + 1.979 + 0 + 0 = $2.0 Mil.
Cash Flow from Operations was 54.127 + 15.962 + 1.246 + 28.056 = $99.4 Mil.
Accounts Receivable was $40.1 Mil.
Revenue was 269.698 + 234.636 + 200.005 + 234.063 = $938.4 Mil.
Gross Profit was 112.797 + 83.365 + 69.606 + 91.604 = $357.4 Mil.
Total Current Assets was $412.7 Mil.
Total Assets was $560.2 Mil.
Property, Plant and Equipment(Net PPE) was $137.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $22.1 Mil.
Selling, General & Admin. Expense(SGA) was $242.4 Mil.
Total Current Liabilities was $162.3 Mil.
Long-Term Debt was $0.0 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)
=(41.036 / 935.067) / (40.059 / 938.402)
=0.04388563 / 0.04268853
=1.028

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)
=(76.966 / 938.402) / (120.369 / 935.067)
=0.38083039 / 0.38110531
=0.9993

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 - (429.415 + 142.989) / 583.237) / (1 - (412.683 + 137.018) / 560.207)
=0.01857392 / 0.01875378
=0.9904

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
=935.067 / 938.402
=0.9964

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))
=(22.133 / (22.133 + 137.018)) / (21.828 / (21.828 + 142.989))
=0.13906919 / 0.13243779
=1.0501

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)
=(253.966 / 935.067) / (242.36 / 938.402)
=0.27160193 / 0.25826884
=1.0516

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 + 179.562) / 583.237) / ((0 + 162.285) / 560.207)
=0.30787141 / 0.28968756
=1.0628

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
=(53.489 - 1.979 - 99.391) / 583.237
=-0.0821

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.

Cato Corp has a M-score of -2.87 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 own currency.

Cato Corp Annual Data

Jan05Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14
DSRI 0.91360.9210.8841.01960.96190.88270.94531.07580.91771.0058
GMI 0.96580.95410.99971.06880.93950.91790.96081.0191.00011.0117
AQI 0.92561.04790.37681.07560.79031.81270.93250.81771.30360.9832
SGI 1.05671.05921.04720.96641.01331.03061.0461.00731.01350.9746
DEPI 0.95071.05261.00190.91750.93960.9280.97621.12881.10941.0701
SGAI 1.01931.02230.99721.02861.06521.04630.97660.94611.00871.0326
LVGI 0.97850.87150.87311.24350.97821.01160.960.84731.05180.9903
TATA -0.153-0.1005-0.0594-0.1054-0.0871-0.0809-0.0442-0.0339-0.0393-0.068
M-score -3.27-2.93-3.03-3.01-3.04-2.67-2.73-2.55-2.61-2.81

Cato Corp Quarterly Data

Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14
DSRI 1.07581.11611.16291.12590.91770.90230.91450.95831.00581.028
GMI 1.0191.01051.00091.00431.00011.01171.02591.01221.01170.9993
AQI 0.81770.85580.71130.99111.30361.57711.47241.09080.98320.9904
SGI 1.00730.99650.99140.99951.01351.00561.00611.00360.97460.9964
DEPI 1.12881.16561.14511.12051.10941.12461.12651.10821.07011.0501
SGAI 0.94610.96690.98650.99421.00871.01681.01411.02511.03261.0516
LVGI 0.84730.94210.8520.90111.05181.0241.12771.0580.99031.0628
TATA -0.0339-0.055-0.0372-0.033-0.0393-0.0206-0.0522-0.059-0.068-0.0821
M-score -2.55-2.64-2.56-2.47-2.61-2.42-2.62-2.76-2.81-2.87
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