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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.
Toro Co has a M-score of -2.83 suggests that the company is not a manipulator.
During the past 3 years, the highest Beneish M-Score of Toro Co was -1.58. The lowest was -4.33. And the median was -2.76.
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 Toro Co 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 * 0.9742||+||0.528 * 1.0091||+||0.404 * 1.1103||+||0.892 * 1.0456||+||0.115 * 1.3615|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9881||+||4.679 * -0.0991||-||0.327 * 0.9983|
|This Year (Apr14) TTM:||Last Year (Apr13) TTM:|
|Accounts Receivable was $313 Mil.|
Revenue was 745.03 + 445.981 + 382.366 + 509.918 = $2,083 Mil.
Gross Profit was 264.54 + 163.514 + 128.648 + 178.031 = $735 Mil.
Total Current Assets was $814 Mil.
Total Assets was $1,179 Mil.
Property, Plant and Equipment(Net PPE) was $193 Mil.
Depreciation, Depletion and Amortization(DDA) was $41 Mil.
Selling, General & Admin. Expense(SGA) was $496 Mil.
Total Current Liabilities was $539 Mil.
Long-Term Debt was $224 Mil.
Net Income was 87.086 + 25.869 + 4.95 + 40.097 = $158 Mil.
Non Operating Income was 1.92 + 1.91 + 4.841 + 2.982 = $12 Mil.
Cash Flow from Operations was 90.543 + -12.594 + 63.736 + 121.492 = $263 Mil.
|Accounts Receivable was $308 Mil.
Revenue was 704.486 + 444.661 + 339.294 + 504.076 = $1,993 Mil.
Gross Profit was 252.301 + 165.817 + 112.899 + 178.122 = $709 Mil.
Total Current Assets was $791 Mil.
Total Assets was $1,115 Mil.
Property, Plant and Equipment(Net PPE) was $177 Mil.
Depreciation, Depletion and Amortization(DDA) was $55 Mil.
Selling, General & Admin. Expense(SGA) was $480 Mil.
Total Current Liabilities was $499 Mil.
Long-Term Debt was $224 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(313.489 / 2083.295)||/||(307.77 / 1992.517)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(163.514 / 1992.517)||/||(264.54 / 2083.295)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (814.354 + 192.751) / 1179.246)||/||(1 - (791.311 + 177.06) / 1114.954)|
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.
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))|
|=||(54.86 / (54.86 + 177.06))||/||(40.529 / (40.529 + 192.751))|
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)|
|=||(496.269 / 2083.295)||/||(480.372 / 1992.517)|
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)|
|=||((223.855 + 538.626) / 1179.246)||/||((223.513 + 498.608) / 1114.954)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(158.002 - 11.653||-||263.177)||/||1179.246|
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.
Toro Co has a M-score of -2.83 suggests that the company will not be a manipulator.
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
Toro Co Annual Data
Toro Co Quarterly Data