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Toll Brothers Inc (NYSE:TOL)
Beneish M-Score
-2.00 (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 -2.00 signals that the company is a manipulator.

TOL' s 10-Year Beneish M-Score Range
Min: -4.14   Max: 2.95
Current: -2

-4.14
2.95

During the past 13 years, the highest Beneish M-Score of Toll Brothers Inc was 2.95. The lowest was -4.14. And the median was -1.90.


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 * 1+0.528 * 0.9536+0.404 * 0.7966+0.892 * 1.4627+0.115 * 1.5411
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8699+4.679 * 0.0231-0.327 * 1.0595
=-2.00

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

This Year (Oct14) TTM:Last Year (Oct13) TTM:
Accounts Receivable was $0 Mil.
Revenue was 1350.69 + 1056.857 + 860.374 + 643.681 = $3,912 Mil.
Gross Profit was 288.115 + 239.625 + 172.376 + 129.649 = $830 Mil.
Total Current Assets was $7,107 Mil.
Total Assets was $8,417 Mil.
Property, Plant and Equipment(Net PPE) was $143 Mil.
Depreciation, Depletion and Amortization(DDA) was $17 Mil.
Selling, General & Admin. Expense(SGA) was $433 Mil.
Total Current Liabilities was $4,556 Mil.
Long-Term Debt was $0 Mil.
Net Income was 131.524 + 97.707 + 65.222 + 45.58 = $340 Mil.
Non Operating Income was 20.768 + 21.681 + 25.428 + 39.456 = $107 Mil.
Cash Flow from Operations was 0 + 104.801 + 184.203 + -250.388 = $39 Mil.
Accounts Receivable was $0 Mil.
Revenue was 1044.534 + 689.16 + 516.004 + 424.601 = $2,674 Mil.
Gross Profit was 222.273 + 144.071 + 95.991 + 78.664 = $541 Mil.
Total Current Assets was $5,508 Mil.
Total Assets was $6,827 Mil.
Property, Plant and Equipment(Net PPE) was $131 Mil.
Depreciation, Depletion and Amortization(DDA) was $25 Mil.
Selling, General & Admin. Expense(SGA) was $340 Mil.
Total Current Liabilities was $985 Mil.
Long-Term Debt was $2,504 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)
=(0 / 3911.602) / (0 / 2674.299)
=0 / 0
=1

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)
=(239.625 / 2674.299) / (288.115 / 3911.602)
=0.20229563 / 0.2121292
=0.9536

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 - (7107.004 + 143.01) / 8416.902) / (1 - (5507.928 + 131.32) / 6827.459)
=0.13863628 / 0.17403415
=0.7966

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
=3911.602 / 2674.299
=1.4627

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))
=(25.21 / (25.21 + 131.32)) / (16.69 / (16.69 + 143.01))
=0.16105539 / 0.10450845
=1.5411

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)
=(432.516 / 3911.602) / (339.932 / 2674.299)
=0.1105726 / 0.12711069
=0.8699

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)
=((0 + 4556.205) / 8416.902) / ((2503.664 + 984.631) / 6827.459)
=0.54131615 / 0.51092141
=1.0595

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
=(340.033 - 107.333 - 38.616) / 8416.902
=0.0231

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 -2.00 signals that the company is likely to 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 0.85311.68480.54181.23161.51471.18981.10191.10120
GMI 0.90111.14622.09283.492-0.3444-1.49430.51270.78250.9207
AQI 1.15550.92991.50951.73080.7881.31940.6152.69121.195
SGI 1.48811.0570.75890.67960.55580.85160.98741.27571.4204
DEPI 1.25160.95320.90921.09580.97351.26441.06451.07421.0888
SGAI 0.85131.12371.18751.22411.34410.96251.00560.86160.8331
LVGI 0.92630.9730.93040.99631.05740.91190.95991.00051.0852
TATA 0.07060.098-0.034-0.1419-0.18310.0233-0.00160.09810.0992
M-score -1.76-1.31-2.51-1.63-4.14-3.45-2.80-1.08-2.51

Toll Brothers Inc Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
DSRI 1.18561.10120.83420.85241.3838000.19420.63861
GMI 0.74170.78250.76340.81360.87390.92070.9330.92920.92990.9536
AQI 1.92042.69122.212.15991.70631.1951.15631.0850.63330.7966
SGI 1.15651.27571.35641.40191.34861.42041.45731.52171.59351.4627
DEPI 1.04361.07421.09451.15061.09551.08881.13021.08121.12691.5411
SGAI 0.92760.86160.80810.80810.84620.83310.83490.82320.79320.8699
LVGI 1.02631.00051.0211.06361.09871.08521.09451.06691.03221.0595
TATA 0.05060.09880.12460.12080.12160.09920.08120.04180.03240.0231
M-score -1.69-1.08-1.33-1.29-1.02-2.51-2.57-2.55-2.28-2.00
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