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Toro Co (NYSE:TTC)
Beneish M-Score
-1.68 (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.

Toro Co has a M-score of -1.68 signals that the company is a manipulator.

TTC' s 10-Year Beneish M-Score Range
Min: -4.25   Max: -1.58
Current: -1.68

-4.25
-1.58

During the past 13 years, the highest Beneish M-Score of Toro Co was -1.58. The lowest was -4.25. And the median was -2.76.


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 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 * 0.9535+0.528 * 0.9996+0.404 * 1.7519+0.892 * 1.0774+0.115 * 5.1005
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9549+4.679 * -0.0009-0.327 * 1.0286
=-1.68

* 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 $205 Mil.
Revenue was 474.211 + 414.14 + 567.54 + 745.03 = $2,201 Mil.
Gross Profit was 168.999 + 143.137 + 202.08 + 264.54 = $779 Mil.
Total Current Assets was $734 Mil.
Total Assets was $1,322 Mil.
Property, Plant and Equipment(Net PPE) was $215 Mil.
Depreciation, Depletion and Amortization(DDA) was $15 Mil.
Selling, General & Admin. Expense(SGA) was $512 Mil.
Total Current Liabilities was $508 Mil.
Long-Term Debt was $365 Mil.
Net Income was 30.95 + 10.902 + 50.013 + 87.086 = $179 Mil.
Non Operating Income was 2.267 + 2.029 + 2.39 + 1.92 = $9 Mil.
Cash Flow from Operations was -23.391 + 18.152 + 86.264 + 90.543 = $172 Mil.
Accounts Receivable was $200 Mil.
Revenue was 445.981 + 382.366 + 509.918 + 704.486 = $2,043 Mil.
Gross Profit was 163.514 + 128.648 + 178.031 + 252.301 = $722 Mil.
Total Current Assets was $683 Mil.
Total Assets was $1,040 Mil.
Property, Plant and Equipment(Net PPE) was $189 Mil.
Depreciation, Depletion and Amortization(DDA) was $93 Mil.
Selling, General & Admin. Expense(SGA) was $497 Mil.
Total Current Liabilities was $443 Mil.
Long-Term Debt was $224 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)
=(205.287 / 2200.921) / (199.829 / 2042.751)
=0.09327323 / 0.09782347
=0.9535

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)
=(143.137 / 2042.751) / (168.999 / 2200.921)
=0.35368677 / 0.35383187
=0.9996

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 - (734.089 + 214.783) / 1322.168) / (1 - (682.872 + 189.186) / 1039.595)
=0.28233628 / 0.16115603
=1.7519

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
=2200.921 / 2042.751
=1.0774

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))
=(93.106 / (93.106 + 189.186)) / (14.849 / (14.849 + 214.783))
=0.3298216 / 0.06466433
=5.1005

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)
=(511.775 / 2200.921) / (497.438 / 2042.751)
=0.23252766 / 0.24351377
=0.9549

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)
=((364.662 + 508.208) / 1322.168) / ((223.839 + 443.427) / 1039.595)
=0.66018085 / 0.64185188
=1.0286

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
=(178.951 - 8.606 - 171.568) / 1322.168
=-0.0009

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 -1.68 signals that the company is likely to 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.

Toro Co Annual Data

Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14
DSRI 0.96780.97720.90750.89910.67440.85930.99540.97430.981
GMI 1.04940.9760.96951.041.03610.98361.0090.98340.9679
AQI 1.05250.96031.13011.05721.10751.01261.17230.9051.0756
SGI 1.08891.02031.02231.00070.81111.10961.11451.03971.0422
DEPI 0.8821.00041.02970.89121.05321.0231.01810.88371.0122
SGAI 0.92720.99771.00990.99841.0740.96810.95430.99441.0142
LVGI 1.05151.00021.06260.98931.04871.07631.00410.95860.9494
TATA -0.0712-0.0732-0.0494-0.1054-0.2141-0.1201-0.0028-0.0674-0.0786
M-score -2.73-2.85-2.76-3.03-3.91-3.09-2.31-2.83-2.80

Toro Co Quarterly Data

Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15
DSRI 0.97430.99891.12351.02040.9811.07390.97420.99550.96510.9535
GMI 0.98340.96080.94650.96280.96790.98881.00911.00110.99760.9996
AQI 0.9050.93111.06470.9051.07561.09390.92211.08550.83481.7519
SGI 1.03971.02851.00411.00551.04221.03191.04561.07131.06431.0774
DEPI 0.88370.88320.80060.97080.68330.72230.92810.93725.5135.1005
SGAI 0.99441.01311.03091.02521.01421.0160.98810.98020.970.9549
LVGI 0.95860.98540.95180.96310.94940.97030.99830.98811.02681.0286
TATA -0.0674-0.04610.0081-0.0362-0.0786-0.0921-0.0987-0.0626-0.014-0.0009
M-score -2.83-2.73-2.34-2.68-2.84-2.81-2.96-2.68-2.07-1.68
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