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Cato Corp (NYSE:CATO)
Beneish M-Score
-2.53 (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 -2.53 suggests that the company is not a manipulator.

CATO' s 10-Year Beneish M-Score Range
Min: -3.28   Max: -2.53
Current: -2.53

-3.28
-2.53

During the past 13 years, the highest Beneish M-Score of Cato Corp was -2.53. The lowest was -3.28. 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 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 * 0.9746+0.528 * 0.9688+0.404 * 2.0239+0.892 * 1.0731+0.115 * 0.9559
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0469+4.679 * -0.0972-0.327 * 1.0742
=-2.53

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

This Year (Jan15) TTM:Last Year (Jan14) TTM:
Accounts Receivable was $41.0 Mil.
Revenue was 240.113 + 216.01 + 246.46 + 284.732 = $987.3 Mil.
Gross Profit was 89.04 + 79.515 + 97.421 + 120.369 = $386.3 Mil.
Total Current Assets was $454.5 Mil.
Total Assets was $608.3 Mil.
Property, Plant and Equipment(Net PPE) was $135.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $22.0 Mil.
Selling, General & Admin. Expense(SGA) was $276.2 Mil.
Total Current Liabilities was $193.9 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 9.152 + 5.692 + 15.651 + 30.006 = $60.5 Mil.
Non Operating Income was 2.179 + 0 + 0 + 0 = $2.2 Mil.
Cash Flow from Operations was 27.579 + 6.342 + 29.411 + 54.127 = $117.5 Mil.
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.



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)
=(41.023 / 987.315) / (39.224 / 920.033)
=0.04155006 / 0.04263325
=0.9746

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)
=(79.515 / 920.033) / (89.04 / 987.315)
=0.37910271 / 0.39130875
=0.9688

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 - (454.451 + 135.181) / 608.278) / (1 - (446.748 + 141.129) / 596.918)
=0.03065375 / 0.01514613
=2.0239

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
=987.315 / 920.033
=1.0731

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))
=(21.825 / (21.825 + 141.129)) / (22.026 / (22.026 + 135.181))
=0.1339335 / 0.14010826
=0.9559

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)
=(276.234 / 987.315) / (245.868 / 920.033)
=0.27978305 / 0.26723824
=1.0469

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 + 193.901) / 608.278) / ((0 + 177.131) / 596.918)
=0.31877036 / 0.2967426
=1.0742

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
=(60.501 - 2.179 - 117.459) / 608.278
=-0.0972

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 -2.53 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

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

Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15
DSRI 1.12590.91770.90230.91450.95831.00581.0280.99560.95710.9746
GMI 1.00431.00011.01171.02591.01221.01170.99930.97470.9770.9688
AQI 0.99111.30361.57711.47241.09080.98320.99041.05711.40042.0239
SGI 0.99951.01351.00561.00611.00360.97460.99641.01471.02951.0731
DEPI 1.12051.10941.12461.12651.10821.07011.05011.03811.02460.9559
SGAI 0.99421.00871.01681.01411.02511.03261.05161.07191.07061.0469
LVGI 0.90111.05181.0241.12771.0580.99031.06281.07291.10891.0742
TATA -0.033-0.0393-0.0206-0.0496-0.0567-0.068-0.0821-0.0858-0.0927-0.0972
M-score -2.47-2.61-2.42-2.61-2.75-2.81-2.87-2.89-2.82-2.53
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