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Cato Corp (NYSE:CATO)
Beneish M-Score
-2.21 (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 -2.21 signals that the company is a manipulator.

CATO' s Beneish M-Score Range Over the Past 10 Years
Min: -3.42   Max: -2.21
Current: -2.21

-3.42
-2.21

During the past 13 years, the highest Beneish M-Score of Cato Corp was -2.21. The lowest was -3.42. And the median was -2.86.


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 * 0.9078+0.528 * 0.9898+0.404 * 2.2059+0.892 * 1.0377+0.115 * 0.9279
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9966+4.679 * -0.0358-0.327 * 0.9539
=-2.21

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

This Year (Oct15) TTM:Last Year (Oct14) TTM:
Accounts Receivable was $38 Mil.
Revenue was 225.467 + 251.269 + 283.899 + 240.113 = $1,001 Mil.
Gross Profit was 85.204 + 96.786 + 121.379 + 89.04 = $392 Mil.
Total Current Assets was $452 Mil.
Total Assets was $618 Mil.
Property, Plant and Equipment(Net PPE) was $140 Mil.
Depreciation, Depletion and Amortization(DDA) was $23 Mil.
Selling, General & Admin. Expense(SGA) was $279 Mil.
Total Current Liabilities was $174 Mil.
Long-Term Debt was $0 Mil.
Net Income was 8.319 + 15.594 + 31.083 + 9.152 = $64 Mil.
Non Operating Income was 0 + 0 + 0 + 2.179 = $2 Mil.
Cash Flow from Operations was 1.978 + 26.002 + 29.765 + 26.378 = $84 Mil.
Accounts Receivable was $41 Mil.
Revenue was 216.01 + 246.058 + 284.732 + 217.574 = $964 Mil.
Gross Profit was 79.515 + 97.421 + 120.369 + 76.966 = $374 Mil.
Total Current Assets was $425 Mil.
Total Assets was $582 Mil.
Property, Plant and Equipment(Net PPE) was $146 Mil.
Depreciation, Depletion and Amortization(DDA) was $22 Mil.
Selling, General & Admin. Expense(SGA) was $270 Mil.
Total Current Liabilities was $172 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)
=(38.205 / 1000.748) / (40.555 / 964.374)
=0.03817644 / 0.04205319
=0.9078

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)
=(96.786 / 964.374) / (85.204 / 1000.748)
=0.38809736 / 0.3921157
=0.9898

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 - (452.361 + 139.512) / 618.377) / (1 - (425.209 + 145.962) / 582.489)
=0.04286059 / 0.01943041
=2.2059

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
=1000.748 / 964.374
=1.0377

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))
=(21.778 / (21.778 + 145.962)) / (22.697 / (22.697 + 139.512))
=0.12983188 / 0.13992442
=0.9279

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)
=(279.146 / 1000.748) / (269.924 / 964.374)
=0.27893735 / 0.27989556
=0.9966

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 + 173.993) / 618.377) / ((0 + 171.82) / 582.489)
=0.28137043 / 0.29497553
=0.9539

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
=(64.148 - 2.179 - 84.123) / 618.377
=-0.0358

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 -2.21 signals that the company is likely to 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

Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15
DSRI 0.9210.8841.01960.96190.88270.94531.07580.91771.00580.975
GMI 0.95410.99971.06880.93950.91790.96081.0191.00011.01170.9684
AQI 1.04790.37681.07560.79031.81270.93250.81771.30360.98322.0239
SGI 1.05921.04720.96641.01331.03061.0461.00731.01350.97461.0727
DEPI 1.05261.00190.91750.93960.9280.97621.12881.10941.07010.9559
SGAI 1.02230.99721.02861.06521.04630.97660.94611.00871.03261.0474
LVGI 0.87150.87311.24350.97821.01160.960.84731.05180.99031.0742
TATA -0.1005-0.0594-0.1054-0.0871-0.0809-0.0442-0.0339-0.0393-0.068-0.0972
M-score -2.93-3.03-3.01-3.04-2.67-2.73-2.55-2.61-2.81-2.53

Cato Corp Quarterly Data

Jul13Oct13Jan14Apr14Jul14Oct14Jan15Apr15Jul15Oct15
DSRI 0.91450.95831.00581.0280.9960.95750.9750.88540.89280.9078
GMI 1.02591.01221.01170.99930.97430.97660.96840.97020.99090.9898
AQI 1.47241.09080.98320.99041.05711.40042.02391.94342.11172.2059
SGI 1.00611.00360.97460.99641.01431.02911.07271.05461.04411.0377
DEPI 1.12651.10821.07011.05011.03811.02460.95590.93790.92690.9279
SGAI 1.01411.02511.03261.05161.07241.07111.04741.03551.00420.9966
LVGI 1.12771.0580.99031.06281.07291.10891.07420.96610.96490.9539
TATA -0.0496-0.0567-0.068-0.0836-0.0878-0.0947-0.0972-0.0527-0.0469-0.0358
M-score -2.61-2.75-2.81-2.88-2.90-2.83-2.53-2.42-2.31-2.21
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