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Cato Corp (NYSE:CATO)
Beneish M-Score
-2.56 (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 -2.56 suggests that the company is not a manipulator.

CATO' s Beneish M-Score Range Over the Past 10 Years
Min: -3.37   Max: -2.21
Current: -2.56

-3.37
-2.21

During the past 13 years, the highest Beneish M-Score of Cato Corp was -2.21. The lowest was -3.37. And the median was -2.80.


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 * 0.879+0.528 * 1.0161+0.404 * 1.2362+0.892 * 0.9858+0.115 * 1.001
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0022+4.679 * -0.0201-0.327 * 0.886
=-2.56

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

This Year (Oct16) TTM:Last Year (Oct15) TTM:
Accounts Receivable was $33.1 Mil.
Revenue was 209.262 + 238.887 + 287.973 + 250.456 = $986.6 Mil.
Gross Profit was 75.635 + 89.828 + 124 + 91.242 = $380.7 Mil.
Total Current Assets was $442.9 Mil.
Total Assets was $617.6 Mil.
Property, Plant and Equipment(Net PPE) was $142.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $23.1 Mil.
Selling, General & Admin. Expense(SGA) was $275.8 Mil.
Total Current Liabilities was $154.0 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 8.26 + 15.887 + 35.874 + 11.846 = $71.9 Mil.
Non Operating Income was 0 + 0 + 0 + 1.894 = $1.9 Mil.
Cash Flow from Operations was -8.753 + 18.847 + 36.16 + 36.108 = $82.4 Mil.
Accounts Receivable was $38.2 Mil.
Revenue was 225.467 + 251.269 + 283.899 + 240.113 = $1,000.7 Mil.
Gross Profit was 85.204 + 96.786 + 121.379 + 89.04 = $392.4 Mil.
Total Current Assets was $452.4 Mil.
Total Assets was $618.4 Mil.
Property, Plant and Equipment(Net PPE) was $139.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $22.7 Mil.
Selling, General & Admin. Expense(SGA) was $279.1 Mil.
Total Current Liabilities was $174.0 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)
=(33.107 / 986.578) / (38.205 / 1000.748)
=0.03355741 / 0.03817644
=0.879

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)
=(392.409 / 1000.748) / (380.705 / 986.578)
=0.3921157 / 0.38588434
=1.0161

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 - (442.851 + 142.008) / 617.581) / (1 - (452.361 + 139.512) / 618.377)
=0.05298414 / 0.04286059
=1.2362

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
=986.578 / 1000.748
=0.9858

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))
=(22.697 / (22.697 + 139.512)) / (23.077 / (23.077 + 142.008))
=0.13992442 / 0.13978859
=1.001

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)
=(275.8 / 986.578) / (279.146 / 1000.748)
=0.27955215 / 0.27893735
=1.0022

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 + 153.959) / 617.581) / ((0 + 173.993) / 618.377)
=0.24929361 / 0.28137043
=0.886

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
=(71.867 - 1.894 - 82.362) / 617.581
=-0.0201

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 -2.56 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.

Cato Corp Annual Data

Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15Jan16
DSRI 0.8841.01960.96190.88270.94531.07580.91771.00580.9750.8711
GMI 0.99971.06880.93950.91790.96081.0191.00011.01170.96841.003
AQI 0.37681.07560.79031.81270.91390.83441.30360.98322.02391.6246
SGI 1.04720.96641.01331.03061.0461.00731.01350.97461.07271.0245
DEPI 1.00190.91750.93960.9280.97621.12881.10941.07010.95590.984
SGAI 0.99721.02861.06521.04630.97660.94611.00871.03261.04740.9742
LVGI 0.87311.24350.97821.01160.9320.87271.05180.99031.07420.8763
TATA -0.0292-0.1054-0.0871-0.0809-0.0433-0.0339-0.0374-0.068-0.0972-0.045
M-score -2.89-3.01-3.04-2.67-2.72-2.55-2.60-2.81-2.53-2.49

Cato Corp Quarterly Data

Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16
DSRI 0.9960.95750.9750.88540.89280.90780.87110.94870.89790.879
GMI 0.97430.97660.96840.97020.99090.98981.0031.00391.00241.0161
AQI 1.05711.40042.02391.94342.11172.20591.62461.38291.23431.2362
SGI 1.01431.02911.07271.05461.04411.03771.02451.02951.01160.9858
DEPI 1.03811.02460.95590.93790.92690.92790.9840.96240.94771.001
SGAI 1.07241.07111.04741.03551.00420.99660.97420.97440.99761.0022
LVGI 1.07291.10891.07420.96610.96490.95390.87630.8460.85320.886
TATA -0.0878-0.0947-0.0972-0.0527-0.0469-0.0358-0.045-0.047-0.0354-0.0201
M-score -2.90-2.83-2.53-2.42-2.31-2.21-2.49-2.51-2.59-2.56
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