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Cato Corp (NYSE:CATO)
Beneish M-Score
-2.50 (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 -2.50 suggests that the company is not a manipulator.

CATO' s Beneish M-Score Range Over the Past 10 Years
Min: -3.19   Max: -2.5
Current: -2.5

-3.19
-2.5

During the past 13 years, the highest Beneish M-Score of Cato Corp was -2.50. The lowest was -3.19. And the median was -2.79.


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 * 0.8711+0.528 * 1.0002+0.404 * 1.6246+0.892 * 1.0245+0.115 * 0.984
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9792+4.679 * -0.0421-0.327 * 0.9429
=-2.50

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

This Year (Jan16) TTM:Last Year (Jan15) TTM:
Accounts Receivable was $37 Mil.
Revenue was 250.456 + 225.467 + 251.269 + 283.899 = $1,011 Mil.
Gross Profit was 92.38 + 85.204 + 96.786 + 121.379 = $396 Mil.
Total Current Assets was $472 Mil.
Total Assets was $642 Mil.
Property, Plant and Equipment(Net PPE) was $138 Mil.
Depreciation, Depletion and Amortization(DDA) was $23 Mil.
Selling, General & Admin. Expense(SGA) was $277 Mil.
Total Current Liabilities was $193 Mil.
Long-Term Debt was $0 Mil.
Net Income was 11.845 + 8.319 + 15.594 + 31.083 = $67 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 36.108 + 1.978 + 26.002 + 29.765 = $94 Mil.
Accounts Receivable was $41 Mil.
Revenue was 240.113 + 216.01 + 246.058 + 284.732 = $987 Mil.
Gross Profit was 89.04 + 79.515 + 97.421 + 120.369 = $386 Mil.
Total Current Assets was $454 Mil.
Total Assets was $608 Mil.
Property, Plant and Equipment(Net PPE) was $135 Mil.
Depreciation, Depletion and Amortization(DDA) was $22 Mil.
Selling, General & Admin. Expense(SGA) was $276 Mil.
Total Current Liabilities was $194 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)
=(36.61 / 1011.091) / (41.023 / 986.913)
=0.03620841 / 0.04156699
=0.8711

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)
=(85.204 / 986.913) / (92.38 / 1011.091)
=0.39146814 / 0.3914079
=1.0002

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 - (472.052 + 138.303) / 642.344) / (1 - (454.451 + 135.181) / 608.278)
=0.04980042 / 0.03065375
=1.6246

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
=1011.091 / 986.913
=1.0245

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))
=(22.026 / (22.026 + 135.181)) / (22.963 / (22.963 + 138.303))
=0.14010826 / 0.14239207
=0.984

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)
=(277.116 / 1011.091) / (276.234 / 986.913)
=0.27407622 / 0.27989701
=0.9792

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 + 193.064) / 642.344) / ((0 + 193.901) / 608.278)
=0.30056169 / 0.31877036
=0.9429

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
=(66.841 - 0 - 93.853) / 642.344
=-0.0421

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 -2.50 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 0.99721.02861.06521.04630.97710.94561.00871.03261.04740.9752
LVGI 0.87311.24350.97821.01160.960.84731.05180.99031.07420.9429
TATA -0.0292-0.1054-0.0931-0.0721-0.0416-0.03-0.0393-0.068-0.0972-0.0421
M-score -2.89-3.01-3.07-2.63-2.71-2.54-2.61-2.81-2.53-2.50

Cato Corp Quarterly Data

Jan14Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16
DSRI 1.00581.0280.9960.95750.9750.88540.89280.90780.87110.9487
GMI 1.01170.99930.97430.97660.96840.97020.99090.98981.00021.001
AQI 0.98320.99041.05711.40042.02391.94342.11172.20591.62461.3829
SGI 0.97460.99641.01431.02911.07271.05461.04411.03771.02451.0295
DEPI 1.07011.05011.03811.02460.95590.93790.92690.92790.9840.9624
SGAI 1.03261.05161.07241.07111.04741.03551.00420.99660.97920.9793
LVGI 0.99031.06281.07291.10891.07420.96610.96490.95390.94290.9228
TATA -0.068-0.0836-0.0878-0.0947-0.0972-0.0527-0.0469-0.0358-0.04210.0116
M-score -2.81-2.88-2.90-2.83-2.53-2.42-2.31-2.21-2.50-2.27
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