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Toro Company (NYSE:TTC)
Beneish M-Score
-2.77 (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 Company has a M-score of -2.77 suggests that the company is not a manipulator.

TTC' s 10-Year Beneish M-Score Range
Min: -4.33   Max: -1.58
Current: -2.77

-4.33
-1.58

During the past 13 years, the highest Beneish M-Score of Toro Company was -1.58. The lowest was -4.33. 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 Company 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 * 1.0739+0.528 * 0.9888+0.404 * 1.0939+0.892 * 1.0319+0.115 * 1.0744
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.016+4.679 * -0.0925-0.327 * 0.9703
=-2.77

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

This Year (Jan14) TTM:Last Year (Jan13) TTM:
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 $54 Mil.
Selling, General & Admin. Expense(SGA) was $497 Mil.
Total Current Liabilities was $443 Mil.
Long-Term Debt was $224 Mil.
Net Income was 25.869 + 4.95 + 40.097 + 78.402 = $149 Mil.
Non Operating Income was 1.91 + 4.841 + 2.982 + 2.995 = $13 Mil.
Cash Flow from Operations was -12.594 + 63.736 + 121.492 + 60.11 = $233 Mil.
Accounts Receivable was $180 Mil.
Revenue was 444.661 + 339.294 + 504.076 + 691.485 = $1,980 Mil.
Gross Profit was 165.817 + 112.899 + 178.122 + 235.422 = $692 Mil.
Total Current Assets was $666 Mil.
Total Assets was $984 Mil.
Property, Plant and Equipment(Net PPE) was $173 Mil.
Depreciation, Depletion and Amortization(DDA) was $54 Mil.
Selling, General & Admin. Expense(SGA) was $474 Mil.
Total Current Liabilities was $427 Mil.
Long-Term Debt was $223 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)
=(199.829 / 2042.751) / (180.317 / 1979.516)
=0.09782347 / 0.09109146
=1.0739

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)
=(128.648 / 1979.516) / (163.514 / 2042.751)
=0.34971175 / 0.35368677
=0.9888

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 - (682.872 + 189.186) / 1039.595) / (1 - (665.886 + 173.267) / 984.143)
=0.16115603 / 0.14732615
=1.0939

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
=2042.751 / 1979.516
=1.0319

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))
=(54.191 / (54.191 + 173.267)) / (53.902 / (53.902 + 189.186))
=0.23824618 / 0.22173863
=1.0744

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)
=(497.438 / 2042.751) / (474.464 / 1979.516)
=0.24351377 / 0.23968687
=1.016

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)
=((223.839 + 443.427) / 1039.595) / ((223.498 + 427.493) / 984.143)
=0.64185188 / 0.66148009
=0.9703

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
=(149.318 - 12.728 - 232.744) / 1039.595
=-0.0925

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 Company has a M-score of -2.77 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.

Toro Company Annual Data

Oct04Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13
DSRI 0.90710.96780.97720.93930.90450.69140.89620.93010.95711.023
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 -2.90-2.73-2.85-2.73-3.02-3.89-3.07-2.38-2.85-2.76

Toro Company Quarterly Data

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
DSRI 0.93010.92820.8940.92310.95710.99891.12351.02041.0231.0739
GMI 1.0091.01921.02080.99320.98340.96080.94650.96280.96790.9888
AQI 1.17230.9761.0280.96040.9050.93111.06470.9051.07561.0939
SGI 1.11451.10471.09581.07251.03971.02851.00411.00551.04221.0319
DEPI 1.01810.98350.9290.87960.88370.88320.80060.97081.01221.0744
SGAI 0.95430.94120.95630.97460.99441.01311.03091.02521.01421.016
LVGI 1.00410.98271.00040.98940.95860.98540.95180.96310.94940.9703
TATA -0.0041-0.016-0.0619-0.0822-0.0682-0.04690.0074-0.037-0.0791-0.0925
M-score -2.38-2.51-2.76-2.90-2.85-2.73-2.34-2.68-2.76-2.77
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