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Toll Brothers Inc (NYSE:TOL)
Beneish M-Score
-2.59 (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 -2.59 suggests that the company is not a manipulator.

TOL' s 10-Year Beneish M-Score Range
Min: -10000000   Max: 8.92
Current: -2.59

-10000000
8.92

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 -1.85.


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 * 0+0.528 * 0.933+0.404 * 1.1122+0.892 * 1.4573+0.115 * 1.1302
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8349+4.679 * 0.0813-0.327 * 1.0945
=-2.59

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

This Year (Jan14) TTM:Last Year (Jan13) TTM:
Accounts Receivable was $0 Mil.
Revenue was 643.681 + 1044.534 + 689.16 + 516.004 = $2,893 Mil.
Gross Profit was 129.649 + 222.273 + 144.071 + 95.991 = $592 Mil.
Total Current Assets was $6,471 Mil.
Total Assets was $7,760 Mil.
Property, Plant and Equipment(Net PPE) was $131 Mil.
Depreciation, Depletion and Amortization(DDA) was $24 Mil.
Selling, General & Admin. Expense(SGA) was $360 Mil.
Total Current Liabilities was $1,001 Mil.
Long-Term Debt was $3,132 Mil.
Net Income was 45.58 + 94.905 + 46.595 + 24.674 = $212 Mil.
Non Operating Income was 38.392 + 20.598 + 12.016 + 23.325 = $94 Mil.
Cash Flow from Operations was -250.388 + -112.428 + -11.127 + -139.586 = $-514 Mil.
Accounts Receivable was $153 Mil.
Revenue was 424.601 + 632.826 + 554.319 + 373.681 = $1,985 Mil.
Gross Profit was 78.664 + 127.088 + 106.391 + 66.86 = $379 Mil.
Total Current Assets was $5,185 Mil.
Total Assets was $6,118 Mil.
Property, Plant and Equipment(Net PPE) was $113 Mil.
Depreciation, Depletion and Amortization(DDA) was $24 Mil.
Selling, General & Admin. Expense(SGA) was $296 Mil.
Total Current Liabilities was $818 Mil.
Long-Term Debt was $2,159 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 / 2893.379) / (152.881 / 1985.427)
=0 / 0.07700157
=0

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)
=(222.273 / 1985.427) / (129.649 / 2893.379)
=0.19089244 / 0.20459954
=0.933

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 - (6471.328 + 131.19) / 7760.255) / (1 - (5184.66 + 112.877) / 6118.251)
=0.14918801 / 0.13414193
=1.1122

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
=2893.379 / 1985.427
=1.4573

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))
=(23.882 / (23.882 + 112.877)) / (23.974 / (23.974 + 131.19))
=0.17462836 / 0.15450749
=1.1302

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)
=(359.755 / 2893.379) / (295.667 / 1985.427)
=0.12433732 / 0.1489186
=0.8349

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)
=((3131.927 + 1000.955) / 7760.255) / ((2158.675 + 818.466) / 6118.251)
=0.53257039 / 0.48660001
=1.0945

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
=(211.754 - 94.331 - -513.529) / 7760.255
=0.0813

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 -2.59 suggests that the company will not 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

Oct04Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13
DSRI 1.02730.77321.52740.79010.87081.05371.18981.76130.6890
GMI 0.97230.88331.14622.513912.4098-0.0807-1.41190.54260.78250.9207
AQI 1.70560.79681.34851.50951.73080.84821.22570.4734.1721.0023
SGI 1.41.50011.0570.75690.67920.55760.85160.98741.27571.4204
DEPI 0.73781.25160.95320.93781.06240.97351.26441.06451.10551.0579
SGAI 0.9440.84451.12371.19051.22491.30670.98691.00560.86160.8331
LVGI 0.99750.92630.9730.93040.99631.05740.91190.99371.0141.0343
TATA 0.05670.07060.1006-0.0352-0.1424-0.18060.0187-0.00520.09930.0992
M-score -1.58-1.98-1.27-2.072.74-4.38-3.47-2.26-0.86-2.58

Toll Brothers Inc Quarterly Data

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
DSRI 1.76130.51031.65731.18560.6890.83420.85241.383800
GMI 0.54260.73620.84330.75440.78250.76340.81360.87390.92070.933
AQI 0.4731.87291.67381.92044.1722.29762.15991.70631.00231.1122
SGI 0.98740.97441.00471.15651.27571.35641.40191.34861.42041.4573
DEPI 1.06450.86010.93441.04361.10551.09451.15061.09551.05791.1302
SGAI 1.00561.07631.01880.92760.86160.80810.80810.84620.83310.8349
LVGI 0.99370.99831.01241.02631.0141.0211.06361.09871.03431.0945
TATA -0.00490.00620.06140.04780.09930.12590.12220.1230.09920.0813
M-score -2.26-2.74-1.41-1.69-0.86-1.29-1.29-1.02-2.58-2.59
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