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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 -2.25 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Toll Brothers Inc was 8.92. The lowest was -10000000.00. And the median was -1.96.
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 * 0.6386||+||0.528 * 0.9299||+||0.404 * 0.707||+||0.892 * 1.5935||+||0.115 * 1.1269|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.7932||+||4.679 * 0.0326||-||0.327 * 1.0322|
|This Year (Jul14) TTM:||Last Year (Jul13) TTM:|
|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.
Net Income was 97.707 + 65.222 + 45.58 + 94.905 = $303 Mil.
Non Operating Income was 21.459 + 25.259 + 38.392 + 20.598 = $106 Mil.
Cash Flow from Operations was 104.801 + 184.203 + -250.388 + -112.428 = $-74 Mil.
|Accounts Receivable was $248 Mil.
Revenue was 689.16 + 516.004 + 424.601 + 632.826 = $2,263 Mil.
Gross Profit was 144.071 + 95.991 + 78.664 + 127.088 = $446 Mil.
Total Current Assets was $5,572 Mil.
Total Assets was $6,788 Mil.
Property, Plant and Equipment(Net PPE) was $126 Mil.
Depreciation, Depletion and Amortization(DDA) was $25 Mil.
Selling, General & Admin. Expense(SGA) was $321 Mil.
Total Current Liabilities was $3,474 Mil.
Long-Term Debt was $98 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)|
|=||(252.516 / 3605.446)||/||(248.139 / 2262.591)|
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)|
|=||(172.376 / 2262.591)||/||(239.625 / 3605.446)|
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 - (7255.376 + 131.509) / 8331.916)||/||(1 - (5572.292 + 126.36) / 6787.543)|
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))|
|=||(25.2 / (25.2 + 126.36))||/||(22.763 / (22.763 + 131.509))|
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)|
|=||(405.636 / 3605.446)||/||(320.939 / 2262.591)|
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)|
|=||((3378.622 + 1146.472) / 8331.916)||/||((97.679 + 3473.536) / 6787.543)|
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|
|=||(303.414 - 105.708||-||-73.812)||/||8331.916|
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 -2.25 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