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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 was -2.30. The lowest was -3.32. And the median was -2.75.
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 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 * 0.9948||+||0.528 * 1.0137||+||0.404 * 1.0707||+||0.892 * 1.0456||+||0.115 * 1.0174|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9805||+||4.679 * -0.052||-||0.327 * 1.0408|
|This Year (Oct14) TTM:||Last Year (Oct13) TTM:|
|Accounts Receivable was $261 Mil.|
Revenue was 7366.066 + 6917.212 + 6491.176 + 7808.787 = $28,583 Mil.
Gross Profit was 2162.437 + 1981.356 + 1813.176 + 2158.487 = $8,115 Mil.
Total Current Assets was $7,155 Mil.
Total Assets was $11,592 Mil.
Property, Plant and Equipment(Net PPE) was $3,850 Mil.
Depreciation, Depletion and Amortization(DDA) was $580 Mil.
Selling, General & Admin. Expense(SGA) was $4,604 Mil.
Total Current Liabilities was $4,390 Mil.
Long-Term Debt was $1,624 Mil.
Net Income was 594.957 + 517.624 + 454.317 + 582.292 = $2,149 Mil.
Non Operating Income was 0 + -16.83 + 0 + 0 = $-17 Mil.
Cash Flow from Operations was 736.353 + 602.235 + 473.749 + 956.957 = $2,769 Mil.
|Accounts Receivable was $251 Mil.
Revenue was 6981.876 + 6442.424 + 6189.609 + 7723.814 = $27,338 Mil.
Gross Profit was 2047.411 + 1855.685 + 1756.076 + 2209.288 = $7,868 Mil.
Total Current Assets was $6,624 Mil.
Total Assets was $10,669 Mil.
Property, Plant and Equipment(Net PPE) was $3,541 Mil.
Depreciation, Depletion and Amortization(DDA) was $544 Mil.
Selling, General & Admin. Expense(SGA) was $4,491 Mil.
Total Current Liabilities was $4,044 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)|
|=||(260.94 / 28583.241)||/||(250.886 / 27337.723)|
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)|
|=||(1981.356 / 27337.723)||/||(2162.437 / 28583.241)|
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 - (7154.622 + 3849.804) / 11592.048)||/||(1 - (6623.575 + 3540.532) / 10669.239)|
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))|
|=||(543.844 / (543.844 + 3540.532))||/||(579.703 / (579.703 + 3849.804))|
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)|
|=||(4604.297 / 28583.241)||/||(4491.421 / 27337.723)|
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)|
|=||((1623.817 + 4389.582) / 11592.048)||/||((1274.186 + 4043.741) / 10669.239)|
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|
|=||(2149.19 - -16.83||-||2769.294)||/||11592.048|
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 has a M-score of -2.66 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 Annual Data
TJX Companies Quarterly Data