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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 -2.39.
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 * 0.9951||+||0.528 * 0.9662||+||0.404 * 0.8583||+||0.892 * 1.0742||+||0.115 * 0.9698|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.003||+||4.679 * 0.0328||-||0.327 * 1.0631|
|This Year (Oct14) TTM:||Last Year (Oct13) TTM:|
|Accounts Receivable was $177 Mil.|
Revenue was 959.589 + 992.93 + 1012.132 + 1298.284 = $4,263 Mil.
Gross Profit was 570.871 + 595.163 + 589.526 + 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 $1,641 Mil.
Total Current Liabilities was $635 Mil.
Long-Term Debt was $890 Mil.
Net Income was 38.268 + 124.12 + 125.609 + -103.599 = $184 Mil.
Non Operating Income was -93.779 + 0 + 0 + -13.191 = $-107 Mil.
Cash Flow from Operations was 24.983 + 76.18 + 76.616 + -50.48 = $127 Mil.
|Accounts Receivable was $166 Mil.
Revenue was 911.478 + 925.884 + 895.484 + 1235.769 = $3,969 Mil.
Gross Profit was 519.481 + 532.129 + 503.224 + 730.815 = $2,286 Mil.
Total Current Assets was $3,363 Mil.
Total Assets was $4,880 Mil.
Property, Plant and Equipment(Net PPE) was $836 Mil.
Depreciation, Depletion and Amortization(DDA) was $175 Mil.
Selling, General & Admin. Expense(SGA) was $1,524 Mil.
Total Current Liabilities was $644 Mil.
Long-Term Debt was $756 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)|
|=||(177.29 / 4262.935)||/||(165.862 / 3968.615)|
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)|
|=||(595.163 / 3968.615)||/||(570.871 / 4262.935)|
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 - (3510.377 + 888.103) / 4996.989)||/||(1 - (3362.502 + 836.062) / 4879.501)|
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))|
|=||(175.412 / (175.412 + 836.062))||/||(193.407 / (193.407 + 888.103))|
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)|
|=||(1641.486 / 4262.935)||/||(1523.63 / 3968.615)|
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)|
|=||((889.505 + 634.536) / 4996.989)||/||((755.724 + 644.114) / 4879.501)|
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|
|=||(184.398 - -106.97||-||127.299)||/||4996.989|
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 -2.36 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