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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.
Toll Brothers Inc has a M-score of -2.57 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Toll Brothers Inc was 81.18. The lowest was -10000000.00. And the median was -1.88.
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 * 0.1942||+||0.528 * 0.9292||+||0.404 * 1.0218||+||0.892 * 1.5217||+||0.115 * 1.0812|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8232||+||4.679 * 0.0419||-||0.327 * 1.0669|
|This Year (Apr14) TTM:||Last Year (Apr13) TTM:|
|Accounts Receivable was $69 Mil.|
Revenue was 860.374 + 643.681 + 1044.534 + 689.16 = $3,238 Mil.
Gross Profit was 172.376 + 129.649 + 222.273 + 144.071 = $668 Mil.
Total Current Assets was $7,004 Mil.
Total Assets was $8,245 Mil.
Property, Plant and Equipment(Net PPE) was $131 Mil.
Depreciation, Depletion and Amortization(DDA) was $24 Mil.
Selling, General & Admin. Expense(SGA) was $385 Mil.
Total Current Liabilities was $1,084 Mil.
Long-Term Debt was $3,458 Mil.
Net Income was 65.222 + 45.58 + 94.905 + 46.595 = $252 Mil.
Non Operating Income was 25.259 + 38.392 + 20.598 + 12.016 = $96 Mil.
Cash Flow from Operations was 184.203 + -250.388 + -112.428 + -11.127 = $-190 Mil.
|Accounts Receivable was $232 Mil.
Revenue was 516.004 + 424.601 + 632.826 + 554.319 = $2,128 Mil.
Gross Profit was 95.991 + 78.664 + 127.088 + 106.391 = $408 Mil.
Total Current Assets was $5,569 Mil.
Total Assets was $6,559 Mil.
Property, Plant and Equipment(Net PPE) was $125 Mil.
Depreciation, Depletion and Amortization(DDA) was $25 Mil.
Selling, General & Admin. Expense(SGA) was $307 Mil.
Total Current Liabilities was $909 Mil.
Long-Term Debt was $2,477 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)|
|=||(68.642 / 3237.749)||/||(232.283 / 2127.75)|
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)|
|=||(129.649 / 2127.75)||/||(172.376 / 3237.749)|
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 - (7004.029 + 131.222) / 8245.066)||/||(1 - (5569.301 + 125.289) / 6558.605)|
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))|
|=||(24.656 / (24.656 + 125.289))||/||(23.537 / (23.537 + 131.222))|
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)|
|=||(384.525 / 3237.749)||/||(306.961 / 2127.75)|
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)|
|=||((3458.368 + 1083.641) / 8245.066)||/||((2477.495 + 908.812) / 6558.605)|
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|
|=||(252.302 - 96.265||-||-189.74)||/||8245.066|
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 -2.57 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
Toll Brothers Inc Annual Data
Toll Brothers Inc Quarterly Data