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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 * 0.9513||+||0.528 * 0.9862||+||0.404 * 1.0149||+||0.892 * 0.996||+||0.115 * 1.0223|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0626||+||4.679 * -0.0422||-||0.327 * 1.005|
|This Year (Jul15) TTM:||Last Year (Jul14) TTM:|
|Accounts Receivable was $180 Mil.|
Revenue was 990.5 + 962.4 + 1285.262 + 959.589 = $4,198 Mil.
Gross Profit was 593 + 569 + 781.615 + 570.871 = $2,514 Mil.
Total Current Assets was $3,614 Mil.
Total Assets was $5,181 Mil.
Property, Plant and Equipment(Net PPE) was $898 Mil.
Depreciation, Depletion and Amortization(DDA) was $195 Mil.
Selling, General & Admin. Expense(SGA) was $1,699 Mil.
Total Current Liabilities was $619 Mil.
Long-Term Debt was $879 Mil.
Net Income was 104.9 + 104.9 + 196.182 + 38.268 = $444 Mil.
Non Operating Income was 0 + -18.6 + 2.79 + -93.779 = $-110 Mil.
Cash Flow from Operations was 166.3 + 143.6 + 437.338 + 24.979 = $772 Mil.
|Accounts Receivable was $190 Mil.
Revenue was 992.9 + 1012.1 + 1298.284 + 911.478 = $4,215 Mil.
Gross Profit was 595.2 + 589.5 + 785.609 + 519.481 = $2,490 Mil.
Total Current Assets was $3,451 Mil.
Total Assets was $4,936 Mil.
Property, Plant and Equipment(Net PPE) was $857 Mil.
Depreciation, Depletion and Amortization(DDA) was $192 Mil.
Selling, General & Admin. Expense(SGA) was $1,605 Mil.
Total Current Liabilities was $670 Mil.
Long-Term Debt was $750 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)|
|=||(180.3 / 4197.751)||/||(190.3 / 4214.762)|
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)|
|=||(569 / 4214.762)||/||(593 / 4197.751)|
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 - (3613.7 + 898.4) / 5180.5)||/||(1 - (3451 + 857.3) / 4935.8)|
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))|
|=||(191.506 / (191.506 + 857.3))||/||(195.358 / (195.358 + 898.4))|
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)|
|=||(1698.571 / 4197.751)||/||(1604.994 / 4214.762)|
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)|
|=||((878.6 + 619.4) / 5180.5)||/||((750.1 + 670.1) / 4935.8)|
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|
|=||(444.25 - -109.589||-||772.217)||/||5180.5|
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 -2.74 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