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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 * 1.1981||+||0.528 * 0.9794||+||0.404 * 0.8867||+||0.892 * 0.9604||+||0.115 * 0.9922|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0901||+||4.679 * -0.0585||-||0.327 * 1.0324|
|This Year (Apr16) TTM:||Last Year (Apr15) TTM:|
|Accounts Receivable was $222 Mil.|
Revenue was 891.3 + 1213.7 + 938.2 + 990.5 = $4,034 Mil.
Gross Profit was 545.6 + 764.8 + 564.5 + 593 = $2,468 Mil.
Total Current Assets was $3,522 Mil.
Total Assets was $5,148 Mil.
Property, Plant and Equipment(Net PPE) was $946 Mil.
Depreciation, Depletion and Amortization(DDA) was $206 Mil.
Selling, General & Admin. Expense(SGA) was $1,743 Mil.
Total Current Liabilities was $718 Mil.
Long-Term Debt was $790 Mil.
Net Income was 87.5 + 163.2 + 91 + 104.9 = $447 Mil.
Non Operating Income was 0 + -1.2 + 0 + 0 = $-1 Mil.
Cash Flow from Operations was 79.1 + 386.1 + 117.6 + 166.3 = $749 Mil.
|Accounts Receivable was $193 Mil.
Revenue was 962.4 + 1285.2 + 959.6 + 992.9 = $4,200 Mil.
Gross Profit was 569 + 781.6 + 570.9 + 595.2 = $2,517 Mil.
Total Current Assets was $3,479 Mil.
Total Assets was $5,141 Mil.
Property, Plant and Equipment(Net PPE) was $897 Mil.
Depreciation, Depletion and Amortization(DDA) was $193 Mil.
Selling, General & Admin. Expense(SGA) was $1,665 Mil.
Total Current Liabilities was $585 Mil.
Long-Term Debt was $874 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)|
|=||(221.5 / 4033.7)||/||(192.5 / 4200.1)|
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)|
|=||(2516.7 / 4200.1)||/||(2467.9 / 4033.7)|
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 - (3522.2 + 946) / 5148.2)||/||(1 - (3478.5 + 897) / 5141.4)|
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))|
|=||(193.2 / (193.2 + 897))||/||(205.7 / (205.7 + 946))|
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)|
|=||(1743.2 / 4033.7)||/||(1665.1 / 4200.1)|
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)|
|=||((790.2 + 717.8) / 5148.2)||/||((873.6 + 585.1) / 5141.4)|
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|
|=||(446.6 - -1.2||-||749.1)||/||5148.2|
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 -2.69 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