Switch to:
Toro Co (NYSE:TTC)
Beneish M-Score
-2.87 (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 -2.87 suggests that the company is not a manipulator.

TTC' s 10-Year Beneish M-Score Range
Min: -4.33   Max: -1.58
Current: -2.87

-4.33
-1.58

During the past 2 years, the highest Beneish M-Score of Toro Co was -1.58. The lowest was -4.33. And the median was -2.77.


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 * 0.9742+0.528 * 1.0091+0.404 * 1.1103+0.892 * 1.0456+0.115 * 1.0824
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9881+4.679 * -0.0991-0.327 * 0.9983
=-2.87

* 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 $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 $54 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

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)
=(313.489 / 2083.295) / (307.77 / 1992.517)
=0.15047749 / 0.15446292
=0.9742

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)
=(163.514 / 1992.517) / (264.54 / 2083.295)
=0.3559011 / 0.35267833
=1.0091

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 - (814.354 + 192.751) / 1179.246) / (1 - (791.311 + 177.06) / 1114.954)
=0.14597548 / 0.13147
=1.1103

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
=2083.295 / 1992.517
=1.0456

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)) / (53.902 / (53.902 + 192.751))
=0.23654709 / 0.21853373
=1.0824

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)
=0.2382135 / 0.24108803
=0.9881

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)
=0.64658349 / 0.64766887
=0.9983

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
=(158.002 - 11.653 - 263.177) / 1179.246
=-0.0991

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 -2.87 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 Co Annual Data

Jul95Apr14
DSRI
GMI
AQI
SGI
DEPI
SGAI
LVGI
TATA
M-score

Toro Co Quarterly Data

Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14
DSRI 0.8940.92310.95710.99891.12351.02041.0231.07390.97420.9955
GMI 1.02080.99320.98340.96080.94650.96280.96790.98881.00911.0011
AQI 1.0280.96040.9050.93110.88420.9051.07561.09391.11031.0855
SGI 1.09581.07251.03971.02851.00411.00551.04221.03191.04561.0713
DEPI 0.9290.87960.88370.88320.91910.82510.85710.90821.08242.2525
SGAI 0.95630.97460.99441.01311.03091.02521.01421.0160.98810.9802
LVGI 1.00040.98940.95860.98540.95180.96310.94940.97030.99830.9881
TATA -0.0621-0.0816-0.0682-0.04690.0074-0.037-0.0791-0.0925-0.0991-0.063
M-score -2.76-2.89-2.85-2.73-2.40-2.70-2.78-2.79-2.87-2.53
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK