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Cato Corp (NYSE:CATO)
Beneish M-Score
-2.51 (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 -2.51 suggests that the company is not a manipulator.

CATO' s Beneish M-Score Range Over the Past 10 Years
Min: -3.37   Max: -2.22
Current: -2.51

-3.37
-2.22

During the past 13 years, the highest Beneish M-Score of Cato Corp was -2.22. 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 * 0.949+0.528 * 1.0035+0.404 * 1.3829+0.892 * 1.0291+0.115 * 0.9624
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9748+4.679 * -0.047-0.327 * 0.846
=-2.51

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

This Year (Apr16) TTM:Last Year (Apr15) TTM:
Accounts Receivable was $37 Mil.
Revenue was 287.973 + 250.456 + 225.467 + 251.269 = $1,015 Mil.
Gross Profit was 124 + 91.242 + 85.204 + 96.786 = $397 Mil.
Total Current Assets was $481 Mil.
Total Assets was $649 Mil.
Property, Plant and Equipment(Net PPE) was $135 Mil.
Depreciation, Depletion and Amortization(DDA) was $23 Mil.
Selling, General & Admin. Expense(SGA) was $278 Mil.
Total Current Liabilities was $163 Mil.
Long-Term Debt was $0 Mil.
Net Income was 35.874 + 11.846 + 8.319 + 15.594 = $72 Mil.
Non Operating Income was 0 + 1.894 + 0 + 0 = $2 Mil.
Cash Flow from Operations was 36.16 + 36.108 + 1.978 + 26.002 = $100 Mil.
Accounts Receivable was $38 Mil.
Revenue was 283.899 + 240.113 + 216.01 + 246.46 = $986 Mil.
Gross Profit was 121.379 + 89.04 + 79.515 + 97.421 = $387 Mil.
Total Current Assets was $466 Mil.
Total Assets was $622 Mil.
Property, Plant and Equipment(Net PPE) was $133 Mil.
Depreciation, Depletion and Amortization(DDA) was $22 Mil.
Selling, General & Admin. Expense(SGA) was $277 Mil.
Total Current Liabilities was $185 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)
=(37.421 / 1015.165) / (38.316 / 986.482)
=0.03686199 / 0.03884105
=0.949

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)
=(387.355 / 986.482) / (397.232 / 1015.165)
=0.39266302 / 0.39129797
=1.0035

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 - (481.127 + 135.289) / 648.804) / (1 - (466.293 + 133.48) / 622.234)
=0.04991954 / 0.03609735
=1.3829

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
=1015.165 / 986.482
=1.0291

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))
=(21.948 / (21.948 + 133.48)) / (23.265 / (23.265 + 135.289))
=0.14121008 / 0.14673234
=0.9624

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)
=(278.2 / 1015.165) / (277.331 / 986.482)
=0.27404412 / 0.28113133
=0.9748

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 + 163.257) / 648.804) / ((0 + 185.069) / 622.234)
=0.25162761 / 0.29742669
=0.846

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
=(71.633 - 1.894 - 100.248) / 648.804
=-0.047

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 -2.51 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

Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15Jan16
DSRI 0.8841.01960.96190.88270.94441.07670.91771.00580.9750.8711
GMI 0.99971.06880.93950.91790.9661.01361.00011.01170.96841.003
AQI 0.37681.07560.79031.81270.93250.81771.30360.98322.02391.6246
SGI 1.04720.96641.01331.03061.0471.00641.01350.97461.07271.0245
DEPI 1.00190.91750.93960.9280.97621.12881.10941.07010.95590.984
SGAI 0.99721.02861.06521.04630.97710.94561.00871.03261.04740.9742
LVGI 0.87311.24350.97821.01160.960.84731.05180.99031.07420.9429
TATA -0.0292-0.1054-0.0871-0.0721-0.0416-0.03-0.0393-0.068-0.0972-0.045
M-score -2.89-3.01-3.04-2.63-2.71-2.54-2.61-2.81-2.53-2.51

Cato Corp Quarterly Data

Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16
DSRI 1.0280.99560.95710.97460.88510.89320.90820.87140.9490.8979
GMI 0.99930.97470.9770.96880.97060.99050.98931.00261.00351.0024
AQI 0.99041.05711.40042.02391.94342.11172.20591.62461.38291.2343
SGI 0.99641.01471.02951.07311.0551.04371.03731.02411.02911.0116
DEPI 1.05011.03811.02460.95590.93790.92690.92790.9840.96240.9477
SGAI 1.05161.07191.07061.04691.03511.00460.9970.97460.97480.9976
LVGI 1.06281.07291.10891.07420.96610.96490.95390.94290.8460.8532
TATA -0.0785-0.0834-0.0904-0.0972-0.0542-0.0487-0.0378-0.045-0.047-0.0065
M-score -2.85-2.88-2.81-2.53-2.43-2.32-2.22-2.51-2.51-2.46
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