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Cato Corporation (NYSE:CATO)
Beneish M-Score
-2.76 (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 Corporation has a M-score of -2.81 suggests that the company is not a manipulator.

CATO' s 10-Year Beneish M-Score Range
Min: -3.42   Max: -2.43
Current: -2.76

-3.42
-2.43

During the past 13 years, the highest Beneish M-Score of Cato Corporation was -2.43. 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 Corporation 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 * 1.0058+0.528 * 1.0117+0.404 * 0.9832+0.892 * 0.9746+0.115 * 1.0701
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0326+4.679 * -0.068-0.327 * 0.9903
=-2.81

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

This Year (Jan14) TTM:Last Year (Jan13) TTM:
Accounts Receivable was $39.2 Mil.
Revenue was 217.574 + 201.043 + 231.718 + 269.698 = $920.0 Mil.
Gross Profit was 76.966 + 72.256 + 86.768 + 112.797 = $348.8 Mil.
Total Current Assets was $446.7 Mil.
Total Assets was $596.9 Mil.
Property, Plant and Equipment(Net PPE) was $141.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.8 Mil.
Selling, General & Admin. Expense(SGA) was $245.9 Mil.
Total Current Liabilities was $177.1 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 3.823 + 4.885 + 14.775 + 30.839 = $54.3 Mil.
Non Operating Income was 1.979 + 0 + 0 + 0 = $2.0 Mil.
Cash Flow from Operations was 15.962 + 1.246 + 26.662 + 49.089 = $93.0 Mil.
Accounts Receivable was $40.0 Mil.
Revenue was 234.636 + 200.005 + 234.063 + 275.344 = $944.0 Mil.
Gross Profit was 83.365 + 69.606 + 91.604 + 117.512 = $362.1 Mil.
Total Current Assets was $390.2 Mil.
Total Assets was $532.6 Mil.
Property, Plant and Equipment(Net PPE) was $134.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $22.5 Mil.
Selling, General & Admin. Expense(SGA) was $244.3 Mil.
Total Current Liabilities was $159.6 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)
=(39.224 / 920.033) / (40.016 / 944.048)
=0.04263325 / 0.04238768
=1.0058

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)
=(72.256 / 944.048) / (76.966 / 920.033)
=0.38354723 / 0.37910271
=1.0117

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 - (446.748 + 141.129) / 596.918) / (1 - (390.214 + 134.227) / 532.646)
=0.01514613 / 0.01540423
=0.9832

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
=920.033 / 944.048
=0.9746

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))
=(22.455 / (22.455 + 134.227)) / (21.825 / (21.825 + 141.129))
=0.14331576 / 0.1339335
=1.0701

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)
=(245.868 / 920.033) / (244.326 / 944.048)
=0.26723824 / 0.25880676
=1.0326

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 + 177.131) / 596.918) / ((0 + 159.602) / 532.646)
=0.2967426 / 0.29963991
=0.9903

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
=(54.322 - 1.979 - 92.959) / 596.918
=-0.068

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 Corporation has a M-score of -2.81 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 Corporation 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 Corporation Quarterly Data

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
DSRI 0.96461.07581.11611.16291.12590.91770.90230.91450.95831.0058
GMI 1.01161.0191.01051.00091.00431.00011.01171.02591.01221.0117
AQI 0.86440.81770.85580.71130.99111.30361.57711.47241.09080.9832
SGI 1.01711.00730.99650.99140.99951.01351.00561.00611.00360.9746
DEPI 1.07021.12881.16561.14511.12051.10941.12461.12651.10821.0701
SGAI 0.92430.94610.96690.98650.99421.00871.01681.01411.02511.0326
LVGI 0.86810.84730.94210.8520.90111.05181.0241.12771.0580.9903
TATA -0.0443-0.0339-0.055-0.0372-0.033-0.0393-0.0231-0.0522-0.059-0.068
M-score -2.69-2.55-2.64-2.56-2.47-2.61-2.43-2.62-2.76-2.81
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