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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.
Tiffany & Co has a M-score of -2.39 suggests that the company is not a 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 -2.41.
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 * 1.0915||+||0.528 * 0.9657||+||0.404 * 0.8883||+||0.892 * 1.078||+||0.115 * 0.9493|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9894||+||4.679 * 0.0024||-||0.327 * 1.0117|
|This Year (Jul14) TTM:||Last Year (Jul13) TTM:|
|Accounts Receivable was $190 Mil.|
Revenue was 992.93 + 1012.132 + 1298.284 + 911.478 = $4,215 Mil.
Gross Profit was 595.163 + 589.526 + 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.
Net Income was 124.12 + 125.609 + -103.599 + 94.61 = $241 Mil.
Non Operating Income was 0 + 0 + 69.465 + -27.844 = $42 Mil.
Cash Flow from Operations was 76.18 + 76.616 + -50.48 + 85.052 = $187 Mil.
|Accounts Receivable was $162 Mil.
Revenue was 925.884 + 895.484 + 1235.769 + 852.741 = $3,910 Mil.
Gross Profit was 532.129 + 503.224 + 730.815 + 464.289 = $2,230 Mil.
Total Current Assets was $3,240 Mil.
Total Assets was $4,732 Mil.
Property, Plant and Equipment(Net PPE) was $815 Mil.
Depreciation, Depletion and Amortization(DDA) was $171 Mil.
Selling, General & Admin. Expense(SGA) was $1,505 Mil.
Total Current Liabilities was $589 Mil.
Long-Term Debt was $757 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)|
|=||(190.318 / 4214.824)||/||(161.746 / 3909.878)|
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)|
|=||(589.526 / 3909.878)||/||(595.163 / 4214.824)|
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 - (3450.975 + 857.317) / 4935.825)||/||(1 - (3239.917 + 814.593) / 4731.718)|
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))|
|=||(170.805 / (170.805 + 814.593))||/||(191.52 / (191.52 + 857.317))|
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)|
|=||(1604.969 / 4214.824)||/||(1504.761 / 3909.878)|
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)|
|=||((750.07 + 670.098) / 4935.825)||/||((756.807 + 588.874) / 4731.718)|
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|
|=||(240.74 - 41.621||-||187.368)||/||4935.825|
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 -2.39 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