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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 -2.30. The lowest was -3.32. And the median was -2.76.
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 * 0.9696||+||0.528 * 0.9919||+||0.404 * 0.9315||+||0.892 * 1.0623||+||0.115 * 1.0204|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9975||+||4.679 * -0.0634||-||0.327 * 1.0616|
|This Year (Apr15) TTM:||Last Year (Apr14) TTM:|
|Accounts Receivable was $263 Mil.|
Revenue was 6865.637 + 8303.953 + 7366.066 + 6917.212 = $29,453 Mil.
Gross Profit was 1945.396 + 2344.916 + 2162.437 + 1981.356 = $8,434 Mil.
Total Current Assets was $6,872 Mil.
Total Assets was $11,366 Mil.
Property, Plant and Equipment(Net PPE) was $3,937 Mil.
Depreciation, Depletion and Amortization(DDA) was $593 Mil.
Selling, General & Admin. Expense(SGA) was $4,791 Mil.
Total Current Liabilities was $4,137 Mil.
Long-Term Debt was $1,624 Mil.
Net Income was 474.601 + 648.23 + 594.957 + 517.624 = $2,235 Mil.
Non Operating Income was 0 + 0 + 0 + -16.83 = $-17 Mil.
Cash Flow from Operations was 447.539 + 1196.032 + 736.353 + 593.033 = $2,973 Mil.
|Accounts Receivable was $256 Mil.
Revenue was 6491.176 + 7808.787 + 6981.876 + 6442.424 = $27,724 Mil.
Gross Profit was 1813.176 + 2158.487 + 2047.411 + 1855.685 = $7,875 Mil.
Total Current Assets was $6,236 Mil.
Total Assets was $10,430 Mil.
Property, Plant and Equipment(Net PPE) was $3,646 Mil.
Depreciation, Depletion and Amortization(DDA) was $562 Mil.
Selling, General & Admin. Expense(SGA) was $4,521 Mil.
Total Current Liabilities was $3,705 Mil.
Long-Term Debt was $1,274 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)|
|=||(263.466 / 29452.868)||/||(255.775 / 27724.263)|
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)|
|=||(2344.916 / 27724.263)||/||(1945.396 / 29452.868)|
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 - (6872.089 + 3936.731) / 11365.946)||/||(1 - (6235.55 + 3645.57) / 10429.938)|
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))|
|=||(562.435 / (562.435 + 3645.57))||/||(593.36 / (593.36 + 3936.731))|
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)|
|=||(4790.991 / 29452.868)||/||(4521.23 / 27724.263)|
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)|
|=||((1623.912 + 4136.536) / 11365.946)||/||((1274.245 + 3705.26) / 10429.938)|
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|
|=||(2235.412 - -16.83||-||2972.957)||/||11365.946|
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 -2.80 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