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Toll Brothers Inc (NYSE:TOL)
Beneish M-Score
-2.12 (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 -2.12 signals that the company is a manipulator.

TOL' s Beneish M-Score Range Over the Past 10 Years
Min: -10000000   Max: 10000000
Current: -2.12

-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 -2.02.


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 * 0.9533+0.404 * 1.0135+0.892 * 1.1632+0.115 * 1.113
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9733+4.679 * 0.0513-0.327 * 1.0645
=-2.12

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Jul16) TTM:Last Year (Jul15) TTM:
Accounts Receivable was $280 Mil.
Revenue was 1269.934 + 1115.557 + 928.566 + 1437.202 = $4,751 Mil.
Gross Profit was 278.518 + 244.986 + 216.255 + 320.87 = $1,061 Mil.
Total Current Assets was $8,066 Mil.
Total Assets was $9,406 Mil.
Property, Plant and Equipment(Net PPE) was $149 Mil.
Depreciation, Depletion and Amortization(DDA) was $23 Mil.
Selling, General & Admin. Expense(SGA) was $510 Mil.
Total Current Liabilities was $1,349 Mil.
Long-Term Debt was $3,877 Mil.
Net Income was 105.483 + 89.054 + 73.18 + 147.163 = $415 Mil.
Non Operating Income was 19.443 + 23.219 + 21.954 + 21.422 = $86 Mil.
Cash Flow from Operations was -309.373 + 7.345 + -23.225 + 171.433 = $-154 Mil.
Accounts Receivable was $0 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 $7,414 Mil.
Total Assets was $8,631 Mil.
Property, Plant and Equipment(Net PPE) was $139 Mil.
Depreciation, Depletion and Amortization(DDA) was $24 Mil.
Selling, General & Admin. Expense(SGA) was $451 Mil.
Total Current Liabilities was $1,182 Mil.
Long-Term Debt was $3,323 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)
=(280.277 / 4751.259) / (0 / 4084.736)
=0.05899005 / 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)
=(869.223 / 4084.736) / (1060.629 / 4751.259)
=0.21279784 / 0.22323115
=0.9533

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 - (8065.56 + 148.804) / 9405.699) / (1 - (7413.614 + 138.597) / 8630.895)
=0.12666097 / 0.12497939
=1.0135

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
=4751.259 / 4084.736
=1.1632

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))
=(23.976 / (23.976 + 138.597)) / (22.728 / (22.728 + 148.804))
=0.14747836 / 0.13250006
=1.113

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)
=(510.054 / 4751.259) / (450.519 / 4084.736)
=0.10735134 / 0.1102933
=0.9733

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)
=((3876.877 + 1348.862) / 9405.699) / ((3322.944 + 1181.965) / 8630.895)
=0.55559284 / 0.52195155
=1.0645

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
=(414.88 - 86.038 - -153.82) / 9405.699
=0.0513

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 -2.12 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 local exchange's currency.

Toll Brothers Inc Annual Data

Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14Oct15
DSRI 1.68480.54321.23241.50991.18981.7613010.69511.1429
GMI 1.14622.513912.4098-0.0807-1.41190.54260.78250.92070.95360.981
AQI 1.34851.50951.73080.84821.22570.4734.1720.80890.7760.8395
SGI 1.0570.75690.67920.55760.85160.98741.27571.42041.46271.0664
DEPI 0.95320.93781.06240.97351.26441.06451.10551.05791.16250.9428
SGAI 1.12371.19051.22491.30670.98691.00560.86160.83310.86990.9867
LVGI 0.9730.93040.99631.05740.91190.99371.0141.03431.05791.0007
TATA 0.0845-0.0352-0.1424-0.18060.0187-0.00640.09930.0992-0.00940.0235
M-score -1.20-2.293.07-3.96-3.47-2.27-1.49-1.74-2.48-2.26

Toll Brothers Inc Quarterly Data

Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16
DSRI 0.194210.695110.927201.142911.40651
GMI 0.92920.92990.95360.93330.93810.99570.9811.01761.00670.9533
AQI 1.02180.7070.7760.89430.93531.10190.83950.92630.85541.0135
SGI 1.52171.59351.46271.42441.27051.13291.06641.03031.09621.1632
DEPI 1.08121.12691.16251.0881.05881.00050.94280.96391.00471.113
SGAI 0.82320.79320.86990.86050.90950.98030.98671.03581.00860.9733
LVGI 1.06691.03221.05790.99420.95840.96111.00070.9931.01411.0645
TATA 0.04190.0326-0.0094-0.0295-0.00590.01140.02350.02310.02320.0513
M-score -2.57-1.91-2.48-2.28-2.36-3.17-2.26-2.37-1.97-2.12
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