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Toll Brothers Inc (NYSE:TOL)
Beneish M-Score
-2.25 (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 -2.25 suggests that the company is not a manipulator.

TOL' s 10-Year Beneish M-Score Range
Min: -10000000   Max: 8.92
Current: -2.25

-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 -1.96.


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 * 0.6386+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
=-2.25

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

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

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)
=(252.516 / 3605.446) / (248.139 / 2262.591)
=0.07003738 / 0.10967029
=0.6386

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)
=(172.376 / 2262.591) / (239.625 / 3605.446)
=0.19703694 / 0.21188031
=0.9299

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 - (7255.376 + 131.509) / 8331.916) / (1 - (5572.292 + 126.36) / 6787.543)
=0.11342301 / 0.16042491
=0.707

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
=3605.446 / 2262.591
=1.5935

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))
=0.16627078 / 0.14755108
=1.1269

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)
=0.11250647 / 0.14184579
=0.7932

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)
=0.54310365 / 0.52614252
=1.0322

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
=(303.414 - 105.708 - -73.812) / 8331.916
=0.0326

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.


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 1.02730.77321.52740.79010.87081.05371.73611.20710.6890
GMI 0.97230.88331.14622.513912.4098-0.0807-1.49430.51270.78250.9207
AQI 1.70560.79681.34851.50951.73080.98880.94840.52433.51941.1882
SGI 1.41.50011.0570.75690.67920.55760.85160.98741.27571.4204
DEPI 0.73781.25160.95320.93781.06240.97351.26441.06451.07421.0888
SGAI 0.9440.84451.12371.19051.22491.33990.96251.00560.86160.8331
LVGI 0.99750.92630.9730.93040.99631.05740.93960.96430.96751.084
TATA 0.05670.07060.1006-0.0352-0.1424-0.18060.0233-0.00520.09850.0992
M-score -1.58-1.98-1.27-2.072.74-4.33-3.11-2.76-1.11-2.52

Toll Brothers Inc Quarterly Data

Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14
DSRI 0.43081.18560.6890.83423.27921.3838000.19420.6386
GMI 0.83090.75440.78250.76340.81360.87390.92070.9330.92920.9299
AQI 2.40961.92043.51941.48091.50031.70631.18821.11221.02180.707
SGI 1.00471.15651.27571.35641.40191.34861.42041.45731.52171.5935
DEPI 0.93441.04361.07421.09451.15061.09551.08881.13021.08121.1269
SGAI 1.01880.92760.86160.80810.80810.84620.83310.83490.82320.7932
LVGI 1.81721.02630.96750.60710.59261.09871.0841.09451.06691.0322
TATA 0.06530.05140.10220.1270.12180.12280.09920.08130.04190.0326
M-score -2.49-1.68-1.10-1.480.83-1.02-2.52-2.59-2.57-2.25
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