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Toll Brothers Inc (NYSE:TOL)
Beneish M-Score
-2.57 (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 -2.57 suggests that the company is not a manipulator.

TOL' s 10-Year Beneish M-Score Range
Min: -10000000   Max: 81.18
Current: -2.57

-10000000
81.18

During the past 13 years, the highest Beneish M-Score of Toll Brothers Inc was 81.18. The lowest was -10000000.00. And the median was -1.88.


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 * 0.1942+0.528 * 0.9292+0.404 * 1.0218+0.892 * 1.5217+0.115 * 1.0812
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8232+4.679 * 0.0419-0.327 * 1.0669
=-2.57

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

This Year (Apr14) TTM:Last Year (Apr13) TTM:
Accounts Receivable was $69 Mil.
Revenue was 860.374 + 643.681 + 1044.534 + 689.16 = $3,238 Mil.
Gross Profit was 172.376 + 129.649 + 222.273 + 144.071 = $668 Mil.
Total Current Assets was $7,004 Mil.
Total Assets was $8,245 Mil.
Property, Plant and Equipment(Net PPE) was $131 Mil.
Depreciation, Depletion and Amortization(DDA) was $24 Mil.
Selling, General & Admin. Expense(SGA) was $385 Mil.
Total Current Liabilities was $1,084 Mil.
Long-Term Debt was $3,458 Mil.
Net Income was 65.222 + 45.58 + 94.905 + 46.595 = $252 Mil.
Non Operating Income was 25.259 + 38.392 + 20.598 + 12.016 = $96 Mil.
Cash Flow from Operations was 184.203 + -250.388 + -112.428 + -11.127 = $-190 Mil.
Accounts Receivable was $232 Mil.
Revenue was 516.004 + 424.601 + 632.826 + 554.319 = $2,128 Mil.
Gross Profit was 95.991 + 78.664 + 127.088 + 106.391 = $408 Mil.
Total Current Assets was $5,569 Mil.
Total Assets was $6,559 Mil.
Property, Plant and Equipment(Net PPE) was $125 Mil.
Depreciation, Depletion and Amortization(DDA) was $25 Mil.
Selling, General & Admin. Expense(SGA) was $307 Mil.
Total Current Liabilities was $909 Mil.
Long-Term Debt was $2,477 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)
=(68.642 / 3237.749) / (232.283 / 2127.75)
=0.02120053 / 0.10916837
=0.1942

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)
=(129.649 / 2127.75) / (172.376 / 3237.749)
=0.19181483 / 0.20643015
=0.9292

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 - (7004.029 + 131.222) / 8245.066) / (1 - (5569.301 + 125.289) / 6558.605)
=0.13460353 / 0.13173762
=1.0218

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
=3237.749 / 2127.75
=1.5217

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))
=(24.656 / (24.656 + 125.289)) / (23.537 / (23.537 + 131.222))
=0.16443363 / 0.15208809
=1.0812

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)
=(384.525 / 3237.749) / (306.961 / 2127.75)
=0.11876307 / 0.14426554
=0.8232

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)
=((3458.368 + 1083.641) / 8245.066) / ((2477.495 + 908.812) / 6558.605)
=0.550876 / 0.51631513
=1.0669

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
=(252.302 - 96.265 - -189.74) / 8245.066
=0.0419

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 -2.57 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 1.02520.77941.52740.7880.87031.05711.18981.10191.10120
GMI 0.96820.90111.14622.09283.492-0.3444-1.49430.51270.78250.9207
AQI 1.70561.15550.92991.50951.73080.7881.31940.6152.69121.195
SGI 1.40281.48811.0570.75890.67960.55580.85160.98741.27571.4204
DEPI 0.73781.25160.95320.90921.09580.97351.26441.06451.07421.0888
SGAI 0.94220.85131.12371.18751.22411.34410.96251.00560.86160.8331
LVGI 0.99750.92630.9730.93040.99631.05740.91190.95991.00051.0852
TATA 0.05910.07060.098-0.034-0.1419-0.18310.0233-0.00160.09810.0992
M-score -1.57-1.83-1.45-2.29-1.96-4.56-3.45-2.80-1.08-2.51

Toll Brothers Inc Quarterly Data

Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14
DSRI 0.51031.65731.18561.10120.83420.85241.3838000.1942
GMI 0.70770.81750.74170.78250.76340.81360.87390.92070.9330.9292
AQI 1.87291.67381.92042.69122.212.15991.70631.1951.15631.0218
SGI 0.97441.00471.15651.27571.35641.40191.34861.42041.45731.5217
DEPI 0.86010.93441.04361.07421.09451.15061.09551.08881.13021.0812
SGAI 1.07631.01880.92760.86160.80810.80810.84620.83310.83490.8232
LVGI 0.99831.01241.02631.00051.0211.06361.09871.08521.09451.0669
TATA 0.01060.06490.05060.09880.12460.12080.12160.09920.08130.0419
M-score -2.73-1.41-1.69-1.08-1.33-1.29-1.02-2.51-2.57-2.57
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