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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 TJX Companies Inc was -1.55. The lowest was -3.18. And the median was -2.70.
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 TJX Companies Inc 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 * 1.037||+||0.528 * 0.9848||+||0.404 * 0.9779||+||0.892 * 1.079||+||0.115 * 0.9822|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0512||+||4.679 * -0.0776||-||0.327 * 1.0446|
|This Year (Oct16) TTM:||Last Year (Oct15) TTM:|
|Accounts Receivable was $306 Mil.|
Revenue was 8291.688 + 7882.053 + 7542.356 + 8962.075 = $32,678 Mil.
Gross Profit was 2447.815 + 2319.092 + 2170.213 + 2573.883 = $9,511 Mil.
Total Current Assets was $7,942 Mil.
Total Assets was $12,867 Mil.
Property, Plant and Equipment(Net PPE) was $4,319 Mil.
Depreciation, Depletion and Amortization(DDA) was $655 Mil.
Selling, General & Admin. Expense(SGA) was $5,688 Mil.
Total Current Liabilities was $4,895 Mil.
Long-Term Debt was $2,227 Mil.
Net Income was 549.786 + 562.174 + 508.346 + 666.466 = $2,287 Mil.
Non Operating Income was -82.946 + 0 + 0 + 0 = $-83 Mil.
Cash Flow from Operations was 928.675 + 738.351 + 420.268 + 1280.779 = $3,368 Mil.
|Accounts Receivable was $274 Mil.
Revenue was 7753.495 + 7363.731 + 6865.637 + 8303.953 = $30,287 Mil.
Gross Profit was 2246.596 + 2144.54 + 1945.396 + 2344.916 = $8,681 Mil.
Total Current Assets was $7,348 Mil.
Total Assets was $11,992 Mil.
Property, Plant and Equipment(Net PPE) was $4,067 Mil.
Depreciation, Depletion and Amortization(DDA) was $605 Mil.
Selling, General & Admin. Expense(SGA) was $5,015 Mil.
Total Current Liabilities was $4,730 Mil.
Long-Term Debt was $1,624 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)|
|=||(306.426 / 32678.172)||/||(273.856 / 30286.816)|
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)|
|=||(8681.448 / 30286.816)||/||(9511.003 / 32678.172)|
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 - (7942.334 + 4318.829) / 12866.836)||/||(1 - (7348.157 + 4066.987) / 11992.433)|
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))|
|=||(604.519 / (604.519 + 4066.987))||/||(655.385 / (655.385 + 4318.829))|
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)|
|=||(5687.991 / 32678.172)||/||(5014.875 / 30286.816)|
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)|
|=||((2226.913 + 4894.514) / 12866.836)||/||((1624.007 + 4730.078) / 11992.433)|
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|
|=||(2286.772 - -82.946||-||3368.073)||/||12866.836|
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.
TJX Companies Inc has a M-score of -2.78 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
TJX Companies Inc Annual Data
TJX Companies Inc Quarterly Data