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Toll Brothers Inc (NYSE:TOL)
Beneish M-Score
-2.28 (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 -2.28 suggests that the company is not a manipulator.

TOL' s 10-Year Beneish M-Score Range
Min: -10000000   Max: 9.12
Current: -2.28

-10000000
9.12

During the past 13 years, the highest Beneish M-Score of Toll Brothers Inc was 9.12. The lowest was -10000000.00. And the median was -1.92.


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 * 0.9333+0.404 * 0.8943+0.892 * 1.4244+0.115 * 1.088
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8605+4.679 * -0.0295-0.327 * 0.9942
=-2.28

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

This Year (Jan15) TTM:Last Year (Jan14) TTM:
Accounts Receivable was $0 Mil.
Revenue was 853.452 + 1350.69 + 1056.857 + 860.374 = $4,121 Mil.
Gross Profit was 203.42 + 288.115 + 239.625 + 172.376 = $904 Mil.
Total Current Assets was $7,156 Mil.
Total Assets was $8,422 Mil.
Property, Plant and Equipment(Net PPE) was $142 Mil.
Depreciation, Depletion and Amortization(DDA) was $24 Mil.
Selling, General & Admin. Expense(SGA) was $441 Mil.
Total Current Liabilities was $1,091 Mil.
Long-Term Debt was $3,368 Mil.
Net Income was 81.325 + 131.524 + 97.707 + 65.222 = $376 Mil.
Non Operating Income was 26.429 + 20.386 + 21.459 + 25.259 = $94 Mil.
Cash Flow from Operations was -33.048 + 274.584 + 104.801 + 184.203 = $531 Mil.
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.



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 / 4121.373) / (0 / 2893.379)
=0 / 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)
=(288.115 / 2893.379) / (203.42 / 4121.373)
=0.20459954 / 0.21923179
=0.9333

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 - (7155.865 + 142.096) / 8421.619) / (1 - (6471.328 + 131.19) / 7760.255)
=0.13342541 / 0.14918801
=0.8943

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
=4121.373 / 2893.379
=1.4244

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))
=(23.974 / (23.974 + 131.19)) / (23.519 / (23.519 + 142.096))
=0.15450749 / 0.14201008
=1.088

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)
=(440.96 / 4121.373) / (359.755 / 2893.379)
=0.10699347 / 0.12433732
=0.8605

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)
=((3367.632 + 1091.343) / 8421.619) / ((3131.927 + 1000.955) / 7760.255)
=0.52946767 / 0.53257039
=0.9942

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
=(375.778 - 93.533 - 530.54) / 8421.619
=-0.0295

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 -2.28 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

Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14
DSRI 0.84631.68480.54321.23241.50991.18981.76130.6891.08840.7501
GMI 0.88331.14622.513912.4098-0.0807-1.41190.54260.78250.92070.9536
AQI 0.79681.34851.50951.73080.84821.22570.4734.1720.80890.7743
SGI 1.50011.0570.75690.67920.55760.85160.98741.27571.42041.4627
DEPI 1.25160.95320.93781.06240.97351.26441.06451.10551.05791.1625
SGAI 0.84451.12371.19051.22491.30670.98691.00560.86160.83310.8699
LVGI 0.92630.9730.93040.99631.05740.91190.99371.0141.03431.0595
TATA 0.07060.1006-0.0352-0.1424-0.18060.0187-0.00520.09930.0992-0.0093
M-score -1.91-1.13-2.293.07-3.96-3.47-2.26-0.86-1.65-2.43

Toll Brothers Inc Quarterly Data

Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15
DSRI 0.6890.83420.85241.38381.088400.19420.63860.75011
GMI 0.78250.76340.81360.87390.92070.9330.92920.92990.95360.9333
AQI 4.1722.29762.15991.70630.80891.11221.02180.7070.77430.8943
SGI 1.27571.35641.40191.34861.42041.45731.52171.59351.46271.4244
DEPI 1.10551.09451.15061.09551.05791.13021.08121.12691.16251.088
SGAI 0.86160.80810.80810.84620.83310.83490.82320.79320.86990.8605
LVGI 1.0141.0211.06361.09871.03431.09451.06691.03221.05950.9942
TATA 0.09930.12590.12220.1230.09920.08130.04190.0326-0.0093-0.0295
M-score -0.86-1.29-1.29-1.02-1.65-2.59-2.57-2.25-2.43-2.28
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