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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 * 1.0147||+||0.528 * 0.9867||+||0.404 * 0.9561||+||0.892 * 1.0603||+||0.115 * 1.0178|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0146||+||4.679 * -0.0513||-||0.327 * 1.0225|
|This Year (Jul15) TTM:||Last Year (Jul14) TTM:|
|Accounts Receivable was $261 Mil.|
Revenue was 7363.731 + 6865.637 + 8303.953 + 7366.066 = $29,899 Mil.
Gross Profit was 2144.54 + 1945.396 + 2344.916 + 2162.437 = $8,597 Mil.
Total Current Assets was $6,797 Mil.
Total Assets was $11,341 Mil.
Property, Plant and Equipment(Net PPE) was $3,996 Mil.
Depreciation, Depletion and Amortization(DDA) was $596 Mil.
Selling, General & Admin. Expense(SGA) was $4,916 Mil.
Total Current Liabilities was $4,161 Mil.
Long-Term Debt was $1,624 Mil.
Net Income was 549.335 + 474.601 + 648.23 + 594.957 = $2,267 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 481.041 + 447.539 + 1196.032 + 723.962 = $2,849 Mil.
|Accounts Receivable was $243 Mil.
Revenue was 6917.212 + 6491.176 + 7808.787 + 6981.876 = $28,199 Mil.
Gross Profit was 1981.356 + 1813.176 + 2158.487 + 2047.411 = $8,000 Mil.
Total Current Assets was $6,594 Mil.
Total Assets was $10,922 Mil.
Property, Plant and Equipment(Net PPE) was $3,776 Mil.
Depreciation, Depletion and Amortization(DDA) was $575 Mil.
Selling, General & Admin. Expense(SGA) was $4,570 Mil.
Total Current Liabilities was $3,825 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)|
|=||(260.952 / 29899.387)||/||(242.549 / 28199.051)|
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)|
|=||(1945.396 / 28199.051)||/||(2144.54 / 29899.387)|
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 - (6796.837 + 3995.978) / 11341.042)||/||(1 - (6593.763 + 3776.037) / 10921.997)|
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))|
|=||(574.504 / (574.504 + 3776.037))||/||(595.782 / (595.782 + 3995.978))|
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)|
|=||(4915.771 / 29899.387)||/||(4569.668 / 28199.051)|
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)|
|=||((1623.959 + 4160.861) / 11341.042)||/||((1623.769 + 3824.929) / 10921.997)|
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|
|=||(2267.123 - 0||-||2848.574)||/||11341.042|
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 -2.69 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
TJX Companies Inc Annual Data
TJX Companies Inc Quarterly Data