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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 -1.69. The lowest was -3.12. And the median was -2.42.
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 * 1.0858||+||0.528 * 0.9703||+||0.404 * 1.0192||+||0.892 * 0.9544||+||0.115 * 0.9908|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0706||+||4.679 * -0.0656||-||0.327 * 1.0151|
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
|This Year (Oct16) TTM:||Last Year (Oct15) TTM:|
|Accounts Receivable was $214 Mil.|
Revenue was 949.3 + 931.6 + 891.3 + 1213.7 = $3,986 Mil.
Gross Profit was 579.5 + 577.1 + 545.6 + 764.8 = $2,467 Mil.
Total Current Assets was $3,509 Mil.
Total Assets was $5,139 Mil.
Property, Plant and Equipment(Net PPE) was $952 Mil.
Depreciation, Depletion and Amortization(DDA) was $210 Mil.
Selling, General & Admin. Expense(SGA) was $1,741 Mil.
Total Current Liabilities was $636 Mil.
Long-Term Debt was $886 Mil.
Net Income was 95.1 + 105.7 + 87.5 + 163.2 = $452 Mil.
Non Operating Income was 0 + 0 + 0 + -1.2 = $-1 Mil.
Cash Flow from Operations was 197.6 + 126.9 + 79.1 + 386.1 = $790 Mil.
|Accounts Receivable was $207 Mil.
Revenue was 938.2 + 990.5 + 962.4 + 1285.2 = $4,176 Mil.
Gross Profit was 564.5 + 593 + 569 + 781.6 = $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.
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)|
|=||(214 / 3985.9)||/||(206.5 / 4176.3)|
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)|
|=||(2508.1 / 4176.3)||/||(2467 / 3985.9)|
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 - (3509.2 + 951.8) / 5139.1)||/||(1 - (3584.8 + 912.2) / 5165.8)|
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))|
|=||(199 / (199 + 912.2))||/||(210 / (210 + 951.8))|
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)|
|=||(1741.4 / 3985.9)||/||(1704.3 / 4176.3)|
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)|
|=||((885.7 + 635.7) / 5139.1)||/||((798.1 + 708.5) / 5165.8)|
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|
|=||(451.5 - -1.2||-||789.7)||/||5139.1|
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 -2.77 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