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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.
During the past 13 years, the highest Beneish M-Score of Tiffany & Co was -1.72. The lowest was -3.12. And the median was -2.43.
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 Tiffany & Co 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 * 1.1888||+||0.528 * 0.9926||+||0.404 * 1.0809||+||0.892 * 0.9797||+||0.115 * 0.9988|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0597||+||4.679 * -0.0681||-||0.327 * 0.9562|
|This Year (Oct15) TTM:||Last Year (Oct14) TTM:|
|Accounts Receivable was $207 Mil.|
Revenue was 938.2 + 990.5 + 962.4 + 1285.213 = $4,176 Mil.
Gross Profit was 564.5 + 593 + 569 + 781.575 = $2,508 Mil.
Total Current Assets was $3,585 Mil.
Total Assets was $5,166 Mil.
Property, Plant and Equipment(Net PPE) was $912 Mil.
Depreciation, Depletion and Amortization(DDA) was $199 Mil.
Selling, General & Admin. Expense(SGA) was $1,704 Mil.
Total Current Liabilities was $709 Mil.
Long-Term Debt was $798 Mil.
Net Income was 91 + 104.9 + 104.9 + 196.179 = $497 Mil.
Non Operating Income was 0 + 0 + -18.6 + 2.811 = $-16 Mil.
Cash Flow from Operations was 117.6 + 166.3 + 143.6 + 437.317 = $865 Mil.
|Accounts Receivable was $177 Mil.
Revenue was 959.6 + 992.9 + 1012.1 + 1298.284 = $4,263 Mil.
Gross Profit was 570.9 + 595.2 + 589.5 + 785.609 = $2,541 Mil.
Total Current Assets was $3,510 Mil.
Total Assets was $4,997 Mil.
Property, Plant and Equipment(Net PPE) was $888 Mil.
Depreciation, Depletion and Amortization(DDA) was $193 Mil.
Selling, General & Admin. Expense(SGA) was $1,642 Mil.
Total Current Liabilities was $635 Mil.
Long-Term Debt was $890 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(206.5 / 4176.313)||/||(177.3 / 4262.884)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(593 / 4262.884)||/||(564.5 / 4176.313)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (3584.8 + 912.2) / 5165.8)||/||(1 - (3510.4 + 888.1) / 4997)|
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.
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))|
|=||(193.408 / (193.408 + 888.1))||/||(198.958 / (198.958 + 912.2))|
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)|
|=||(1704.246 / 4176.313)||/||(1641.531 / 4262.884)|
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)|
|=||((798.1 + 708.5) / 5165.8)||/||((889.5 + 634.6) / 4997)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(496.979 - -15.789||-||864.817)||/||5165.8|
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.
Tiffany & Co has a M-score of -2.61 suggests that the company will not be a manipulator.
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
Tiffany & Co Annual Data
Tiffany & Co Quarterly Data