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Cato Corp (NYSE:CATO)
Beneish M-Score
-2.59 (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 -2.59 suggests that the company is not a manipulator.

CATO' s Beneish M-Score Range Over the Past 10 Years
Min: -3.37   Max: -2.21
Current: -2.59

-3.37
-2.21

During the past 13 years, the highest Beneish M-Score of Cato Corp was -2.21. 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 * 0.8979+0.528 * 1.0024+0.404 * 1.2343+0.892 * 1.0116+0.115 * 0.9477
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9976+4.679 * -0.0354-0.327 * 0.8532
=-2.59

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

This Year (Jul16) TTM:Last Year (Jul15) TTM:
Accounts Receivable was USD 34 Mil.
Revenue was 238.887 + 287.973 + 250.456 + 225.467 = USD 1,003 Mil.
Gross Profit was 89.828 + 124 + 91.242 + 85.204 = USD 390 Mil.
Total Current Assets was USD 485 Mil.
Total Assets was USD 652 Mil.
Property, Plant and Equipment(Net PPE) was USD 134 Mil.
Depreciation, Depletion and Amortization(DDA) was USD 23 Mil.
Selling, General & Admin. Expense(SGA) was USD 279 Mil.
Total Current Liabilities was USD 156 Mil.
Long-Term Debt was USD 0 Mil.
Net Income was 15.887 + 35.874 + 11.846 + 8.319 = USD 72 Mil.
Non Operating Income was 0 + 0 + 1.894 + 0 = USD 2 Mil.
Cash Flow from Operations was 18.847 + 36.16 + 36.108 + 1.978 = USD 93 Mil.
Accounts Receivable was USD 38 Mil.
Revenue was 251.269 + 283.899 + 240.113 + 216.01 = USD 991 Mil.
Gross Profit was 96.786 + 121.379 + 89.04 + 79.515 = USD 387 Mil.
Total Current Assets was USD 463 Mil.
Total Assets was USD 623 Mil.
Property, Plant and Equipment(Net PPE) was USD 135 Mil.
Depreciation, Depletion and Amortization(DDA) was USD 22 Mil.
Selling, General & Admin. Expense(SGA) was USD 276 Mil.
Total Current Liabilities was USD 175 Mil.
Long-Term Debt was USD 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)
=(34.136 / 1002.783) / (37.58 / 991.291)
=0.03404126 / 0.03791016
=0.8979

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)
=(386.72 / 991.291) / (390.274 / 1002.783)
=0.39011753 / 0.38919088
=1.0024

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 - (485.281 + 134.27) / 651.915) / (1 - (463.338 + 134.993) / 623.404)
=0.04964451 / 0.0402195
=1.2343

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
=1002.783 / 991.291
=1.0116

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))
=(22.079 / (22.079 + 134.993)) / (23.383 / (23.383 + 134.27))
=0.14056611 / 0.14831941
=0.9477

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)
=(278.644 / 1002.783) / (276.11 / 991.291)
=0.27787069 / 0.27853577
=0.9976

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 + 156.281) / 651.915) / ((0 + 175.169) / 623.404)
=0.23972604 / 0.28098793
=0.8532

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
=(71.926 - 1.894 - 93.093) / 651.915
=-0.0354

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 -2.59 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 0.8841.01960.96190.88270.94531.07580.91771.00580.9750.8711
GMI 0.99971.06880.93950.91790.96081.0191.00011.01170.96841.003
AQI 0.37681.07560.79031.81270.93250.81771.30360.98322.02391.6246
SGI 1.04720.96641.01331.03061.0461.00731.01350.97461.07271.0245
DEPI 1.00190.91750.93960.9280.97621.12881.10941.07010.95590.984
SGAI 0.99721.02861.06521.04630.97660.94611.00871.03261.04740.9742
LVGI 0.87311.24350.97821.01160.960.84731.05180.99031.07420.9429
TATA -0.0292-0.1054-0.0871-0.0809-0.0442-0.0339-0.0374-0.068-0.0972-0.045
M-score -2.89-3.01-3.04-2.67-2.73-2.55-2.60-2.81-2.53-2.51

Cato Corp Quarterly Data

Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16
DSRI 1.0280.9960.95750.9750.88540.89280.90780.87110.94870.8979
GMI 0.99930.97430.97660.96840.97020.99090.98981.0031.00391.0024
AQI 0.99041.05711.40042.02391.94342.11172.20591.62461.38291.2343
SGI 0.99641.01431.02911.07271.05461.04411.03771.02451.02951.0116
DEPI 1.05011.03811.02460.95590.93790.92690.92790.9840.96240.9477
SGAI 1.05161.07241.07111.04741.03551.00420.99660.97420.97440.9976
LVGI 1.06281.07291.10891.07420.96610.96490.95390.94290.8460.8532
TATA -0.0836-0.0878-0.0947-0.0972-0.0527-0.0469-0.0358-0.045-0.047-0.0354
M-score -2.88-2.90-2.83-2.53-2.42-2.31-2.21-2.51-2.51-2.59
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