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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 Toll Brothers Inc was 10000000.00. The lowest was -10000000.00. And the median was -2.02.
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 Toll Brothers 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||+||0.528 * 0.9533||+||0.404 * 1.0135||+||0.892 * 1.1632||+||0.115 * 1.113|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9733||+||4.679 * 0.0513||-||0.327 * 1.0645|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Jul16) TTM:||Last Year (Jul15) TTM:|
|Accounts Receivable was $280 Mil.|
Revenue was 1269.934 + 1115.557 + 928.566 + 1437.202 = $4,751 Mil.
Gross Profit was 278.518 + 244.986 + 216.255 + 320.87 = $1,061 Mil.
Total Current Assets was $8,066 Mil.
Total Assets was $9,406 Mil.
Property, Plant and Equipment(Net PPE) was $149 Mil.
Depreciation, Depletion and Amortization(DDA) was $23 Mil.
Selling, General & Admin. Expense(SGA) was $510 Mil.
Total Current Liabilities was $1,349 Mil.
Long-Term Debt was $3,877 Mil.
Net Income was 105.483 + 89.054 + 73.18 + 147.163 = $415 Mil.
Non Operating Income was 19.443 + 23.219 + 21.954 + 21.422 = $86 Mil.
Cash Flow from Operations was -309.373 + 7.345 + -23.225 + 171.433 = $-154 Mil.
|Accounts Receivable was $0 Mil.
Revenue was 1028.011 + 852.583 + 853.452 + 1350.69 = $4,085 Mil.
Gross Profit was 203.617 + 174.071 + 203.42 + 288.115 = $869 Mil.
Total Current Assets was $7,414 Mil.
Total Assets was $8,631 Mil.
Property, Plant and Equipment(Net PPE) was $139 Mil.
Depreciation, Depletion and Amortization(DDA) was $24 Mil.
Selling, General & Admin. Expense(SGA) was $451 Mil.
Total Current Liabilities was $1,182 Mil.
Long-Term Debt was $3,323 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)|
|=||(280.277 / 4751.259)||/||(0 / 4084.736)|
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)|
|=||(869.223 / 4084.736)||/||(1060.629 / 4751.259)|
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 - (8065.56 + 148.804) / 9405.699)||/||(1 - (7413.614 + 138.597) / 8630.895)|
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))|
|=||(23.976 / (23.976 + 138.597))||/||(22.728 / (22.728 + 148.804))|
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)|
|=||(510.054 / 4751.259)||/||(450.519 / 4084.736)|
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)|
|=||((3876.877 + 1348.862) / 9405.699)||/||((3322.944 + 1181.965) / 8630.895)|
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|
|=||(414.88 - 86.038||-||-153.82)||/||9405.699|
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.
Toll Brothers Inc has a M-score of -2.12 signals that the company is likely to 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
Toll Brothers Inc Annual Data
Toll Brothers Inc Quarterly Data