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Toro Co (NYSE:TTC)
Beneish M-Score
-2.04 (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 -2.04 signals that the company is a manipulator.

TTC' s 10-Year Beneish M-Score Range
Min: -4.31   Max: -1.58
Current: -2.04

-4.31
-1.58

During the past 13 years, the highest Beneish M-Score of Toro Co was -1.58. The lowest was -4.31. 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 * 1.0076+0.528 * 0.9976+0.404 * 0.8348+0.892 * 1.0643+0.115 * 5.513
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.97+4.679 * -0.0144-0.327 * 1.0268
=-2.04

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

This Year (Oct14) TTM:Last Year (Oct13) TTM:
Accounts Receivable was $158 Mil.
Revenue was 414.14 + 567.54 + 745.03 + 445.981 = $2,173 Mil.
Gross Profit was 143.137 + 202.08 + 264.54 + 163.514 = $773 Mil.
Total Current Assets was $824 Mil.
Total Assets was $1,192 Mil.
Property, Plant and Equipment(Net PPE) was $205 Mil.
Depreciation, Depletion and Amortization(DDA) was $13 Mil.
Selling, General & Admin. Expense(SGA) was $510 Mil.
Total Current Liabilities was $400 Mil.
Long-Term Debt was $347 Mil.
Net Income was 10.902 + 50.013 + 87.086 + 25.869 = $174 Mil.
Non Operating Income was 2.494 + 2.39 + 1.92 + 1.91 = $9 Mil.
Cash Flow from Operations was 18.152 + 86.264 + 90.543 + -12.594 = $182 Mil.
Accounts Receivable was $147 Mil.
Revenue was 382.366 + 509.918 + 704.486 + 444.661 = $2,041 Mil.
Gross Profit was 128.648 + 178.031 + 252.301 + 165.817 = $725 Mil.
Total Current Assets was $653 Mil.
Total Assets was $1,003 Mil.
Property, Plant and Equipment(Net PPE) was $185 Mil.
Depreciation, Depletion and Amortization(DDA) was $93 Mil.
Selling, General & Admin. Expense(SGA) was $494 Mil.
Total Current Liabilities was $389 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)
=(158.158 / 2172.691) / (147.475 / 2041.431)
=0.0727936 / 0.07224099
=1.0076

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)
=(202.08 / 2041.431) / (143.137 / 2172.691)
=0.35504359 / 0.35590473
=0.9976

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 - (824.036 + 205.195) / 1192.415) / (1 - (653.267 + 185.096) / 1002.748)
=0.13685168 / 0.16393451
=0.8348

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
=2172.691 / 2041.431
=1.0643

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))
=(93.338 / (93.338 + 185.096)) / (13.285 / (13.285 + 205.195))
=0.33522486 / 0.06080648
=5.513

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)
=(510.114 / 2172.691) / (494.135 / 2041.431)
=0.23478442 / 0.24205325
=0.97

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)
=((347.316 + 400.42) / 1192.415) / ((223.544 + 388.845) / 1002.748)
=0.62707698 / 0.61071077
=1.0268

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
=(173.87 - 8.714 - 182.365) / 1192.415
=-0.0144

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 -2.04 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

Oct04Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13
DSRI 0.92880.96780.97720.90750.89910.67440.85930.99540.97430.981
GMI 0.99691.04940.9760.96951.041.03610.98361.0090.98340.9679
AQI 1.04251.05250.96031.13011.05721.10751.01261.17230.9051.0756
SGI 1.10421.08891.02031.02231.00070.81111.10961.11451.03971.0422
DEPI 0.98250.8821.00041.02970.89121.05321.0231.01810.88371.0122
SGAI 0.95440.92720.99771.00990.99841.0740.96810.95430.99441.0142
LVGI 1.03851.05151.00021.06260.98931.04871.07631.00410.95860.9494
TATA -0.0923-0.0712-0.0732-0.0494-0.1054-0.213-0.1213-0.0041-0.0682-0.0791
M-score -2.88-2.73-2.85-2.76-3.03-3.90-3.10-2.32-2.83-2.80

Toro Co Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
DSRI 0.92310.97430.99891.12351.02040.9811.07390.97420.99551.0076
GMI 0.99320.98340.96080.94650.96280.96790.98881.00911.00110.9976
AQI 0.96040.9050.93110.88420.9051.07561.09391.11031.08550.8348
SGI 1.07251.03971.02851.00411.00551.04221.03191.04561.07131.0643
DEPI 0.87960.88370.88320.91910.97080.68330.72230.80840.93725.513
SGAI 0.97460.99441.01311.03091.02521.01421.0160.98810.98020.97
LVGI 0.98940.95860.98540.95180.96310.94940.97030.99830.98811.0268
TATA -0.0822-0.0682-0.04690.0074-0.037-0.0791-0.0925-0.0991-0.063-0.0144
M-score -2.90-2.83-2.73-2.40-2.68-2.84-2.81-2.90-2.68-2.04
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