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Toll Brothers Inc (NYSE:TOL)
Beneish M-Score
-2.41 (As of Today)

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.

Toll Brothers Inc has a M-score of -2.41 suggests that the company is not a manipulator.

TOL' s 10-Year Beneish M-Score Range
Min: -10000000   Max: 10000000
Current: -2.41

-10000000
10000000

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 -1.92.


Definition

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 * 0.9639+0.528 * 0.9957+0.404 * 0.8202+0.892 * 1.1329+0.115 * 1.2786
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9803+4.679 * 0.0029-0.327 * 0.9611
=-2.41

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jul15) TTM:Last Year (Jul14) TTM:
Accounts Receivable was $276 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 $7,689 Mil.
Total Assets was $8,631 Mil.
Property, Plant and Equipment(Net PPE) was $139 Mil.
Depreciation, Depletion and Amortization(DDA) was $18 Mil.
Selling, General & Admin. Expense(SGA) was $451 Mil.
Total Current Liabilities was $1,182 Mil.
Long-Term Debt was $3,323 Mil.
Net Income was 66.749 + 67.93 + 81.325 + 131.524 = $348 Mil.
Non Operating Income was 20.022 + 19.448 + 26.429 + 20.386 = $86 Mil.
Cash Flow from Operations was 0 + -4.894 + -33.048 + 274.584 = $237 Mil.
Accounts Receivable was $253 Mil.
Revenue was 1056.857 + 860.374 + 643.681 + 1044.534 = $3,605 Mil.
Gross Profit was 239.625 + 172.376 + 129.649 + 222.273 = $764 Mil.
Total Current Assets was $7,255 Mil.
Total Assets was $8,332 Mil.
Property, Plant and Equipment(Net PPE) was $132 Mil.
Depreciation, Depletion and Amortization(DDA) was $23 Mil.
Selling, General & Admin. Expense(SGA) was $406 Mil.
Total Current Liabilities was $1,146 Mil.
Long-Term Debt was $3,379 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(275.759 / 4084.736) / (252.516 / 3605.446)
=0.06750963 / 0.07003738
=0.9639

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(174.071 / 3605.446) / (203.617 / 4084.736)
=0.21188031 / 0.21279784
=0.9957

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (7689.373 + 138.597) / 8630.895) / (1 - (7255.376 + 131.509) / 8331.916)
=0.09302917 / 0.11342301
=0.8202

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=4084.736 / 3605.446
=1.1329

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))
=(22.763 / (22.763 + 131.509)) / (18.081 / (18.081 + 138.597))
=0.14755108 / 0.11540229
=1.2786

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)
=(450.519 / 4084.736) / (405.636 / 3605.446)
=0.1102933 / 0.11250647
=0.9803

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)
=((3322.944 + 1181.965) / 8630.895) / ((3378.622 + 1146.472) / 8331.916)
=0.52195155 / 0.54310365
=0.9611

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(347.528 - 86.285 - 236.642) / 8630.895
=0.0029

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 -2.41 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Toll Brothers Inc Annual Data

Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14
DSRI 0.84631.68480.54321.23241.50991.18981.76130.6891.08840.7501
GMI 0.88331.14622.513912.4098-0.0807-1.41190.54260.78250.92070.9536
AQI 0.79681.34851.50951.73080.84821.22570.4734.1720.80890.7743
SGI 1.50011.0570.75690.67920.55760.85160.98741.27571.42041.4627
DEPI 1.25160.95320.93781.06240.97351.26441.06451.10551.05791.1625
SGAI 0.84451.12371.19051.22491.30670.98691.00560.86160.83310.8699
LVGI 0.92630.9730.93040.99631.05740.91190.99371.0141.03431.0595
TATA 0.07060.1006-0.0352-0.1424-0.18060.0187-0.00520.09930.0992-0.0093
M-score -1.91-1.13-2.293.07-3.96-3.47-2.26-0.86-1.65-2.43

Toll Brothers Inc Quarterly Data

Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15Apr15Jul15
DSRI 0.85241.38381.088400.19420.63860.750110.92720.9639
GMI 0.81360.87390.92070.9330.92920.92990.95360.93330.93810.9957
AQI 2.15991.70630.80891.11221.02180.7070.77430.89430.93530.8202
SGI 1.40191.34861.42041.45731.52171.59351.46271.42441.27051.1329
DEPI 1.15061.09551.05791.13021.08121.12691.16251.0881.05881.2786
SGAI 0.80810.84620.83310.83490.82320.79320.86990.86050.90950.9803
LVGI 1.06361.09871.03431.09451.06691.03221.05950.99420.95840.9611
TATA 0.12220.1230.09920.08130.04190.0326-0.0093-0.0295-0.00590.0029
M-score -1.29-1.02-1.65-2.59-2.57-2.25-2.43-2.28-2.36-2.41
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