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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 -2.01.
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 * 1.1154||+||0.404 * 1.206||+||0.892 * 1.2156||+||0.115 * 1.2231|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9627||+||4.679 * 0.0034||-||0.327 * 1.0384|
|This Year (Jan17) TTM:||Last Year (Jan16) TTM:|
|Accounts Receivable was $513 Mil.|
Revenue was 920.73 + 1855.451 + 1269.934 + 1115.557 = $5,162 Mil.
Gross Profit was 187.728 + 285.684 + 278.518 + 244.986 = $997 Mil.
Total Current Assets was $7,926 Mil.
Total Assets was $9,517 Mil.
Property, Plant and Equipment(Net PPE) was $172 Mil.
Depreciation, Depletion and Amortization(DDA) was $24 Mil.
Selling, General & Admin. Expense(SGA) was $551 Mil.
Total Current Liabilities was $1,563 Mil.
Long-Term Debt was $3,632 Mil.
Net Income was 70.416 + 114.378 + 105.483 + 89.054 = $379 Mil.
Non Operating Income was 58.207 + 31.907 + 19.443 + 23.219 = $133 Mil.
Cash Flow from Operations was 41.964 + 474.024 + -309.373 + 7.345 = $214 Mil.
|Accounts Receivable was $0 Mil.
Revenue was 928.566 + 1437.202 + 1028.011 + 852.583 = $4,246 Mil.
Gross Profit was 216.255 + 320.87 + 203.617 + 174.071 = $915 Mil.
Total Current Assets was $7,546 Mil.
Total Assets was $8,763 Mil.
Property, Plant and Equipment(Net PPE) was $135 Mil.
Depreciation, Depletion and Amortization(DDA) was $23 Mil.
Selling, General & Admin. Expense(SGA) was $471 Mil.
Total Current Liabilities was $1,237 Mil.
Long-Term Debt was $3,370 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)|
|=||(512.974 / 5161.672)||/||(0 / 4246.362)|
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)|
|=||(914.813 / 4246.362)||/||(996.916 / 5161.672)|
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 - (7925.888 + 172.459) / 9516.8)||/||(1 - (7545.644 + 134.746) / 8763.437)|
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))|
|=||(23.281 / (23.281 + 134.746))||/||(23.618 / (23.618 + 172.459))|
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)|
|=||(550.681 / 5161.672)||/||(470.59 / 4246.362)|
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)|
|=||((3632.458 + 1563.318) / 9516.8)||/||((3370.094 + 1237.378) / 8763.437)|
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|
|=||(379.331 - 132.776||-||213.96)||/||9516.8|
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 -2.11 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