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Toro Co (NYSE:TTC)
Beneish M-Score
-2.63 (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 -2.63 suggests that the company is not a manipulator.

TTC' s 10-Year Beneish M-Score Range
Min: -4.35   Max: -1.58
Current: -2.63

-4.35
-1.58

During the past 2 years, the highest Beneish M-Score of Toro Co was -1.58. The lowest was -4.35. And the median was -2.75.


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 * 0.9955+0.528 * 1.0011+0.404 * 1.0855+0.892 * 1.0713+0.115 * 1.4039
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9802+4.679 * -0.063-0.327 * 0.9881
=-2.63

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

This Year (Jul14) TTM:Last Year (Jul13) TTM:
Accounts Receivable was $216 Mil.
Revenue was 567.54 + 745.03 + 445.981 + 382.366 = $2,141 Mil.
Gross Profit was 202.08 + 264.54 + 163.514 + 128.648 = $759 Mil.
Total Current Assets was $760 Mil.
Total Assets was $1,128 Mil.
Property, Plant and Equipment(Net PPE) was $203 Mil.
Depreciation, Depletion and Amortization(DDA) was $41 Mil.
Selling, General & Admin. Expense(SGA) was $507 Mil.
Total Current Liabilities was $460 Mil.
Long-Term Debt was $224 Mil.
Net Income was 50.013 + 87.086 + 25.869 + 4.95 = $168 Mil.
Non Operating Income was 2.39 + 1.92 + 1.91 + 4.841 = $11 Mil.
Cash Flow from Operations was 86.264 + 90.543 + -12.594 + 63.736 = $228 Mil.
Accounts Receivable was $202 Mil.
Revenue was 509.918 + 704.486 + 444.661 + 339.294 = $1,998 Mil.
Gross Profit was 178.031 + 252.301 + 165.817 + 112.899 = $709 Mil.
Total Current Assets was $712 Mil.
Total Assets was $1,031 Mil.
Property, Plant and Equipment(Net PPE) was $180 Mil.
Depreciation, Depletion and Amortization(DDA) was $55 Mil.
Selling, General & Admin. Expense(SGA) was $483 Mil.
Total Current Liabilities was $409 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)
=(215.595 / 2140.917) / (202.148 / 1998.359)
=0.10070218 / 0.101157
=0.9955

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)
=(264.54 / 1998.359) / (202.08 / 2140.917)
=0.35481513 / 0.35441916
=1.0011

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 - (759.749 + 202.828) / 1127.827) / (1 - (712.007 + 179.943) / 1031.13)
=0.1465207 / 0.13497813
=1.0855

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
=2140.917 / 1998.359
=1.0713

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))
=(54.909 / (54.909 + 179.943)) / (40.529 / (40.529 + 202.828))
=0.23380257 / 0.16654134
=1.4039

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)
=(506.861 / 2140.917) / (482.686 / 1998.359)
=0.23674949 / 0.24154118
=0.9802

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)
=((223.8 + 459.749) / 1127.827) / ((223.528 + 408.946) / 1031.13)
=0.60607611 / 0.6133795
=0.9881

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
=(167.918 - 11.061 - 227.949) / 1127.827
=-0.063

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 -2.63 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 1.02080.99320.98340.96080.94660.96280.96790.98881.00911.0011
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 0.9931.04161.04041.03310.91910.97080.86710.91891.09941.4039
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 -2.75-2.87-2.83-2.72-2.40-2.68-2.78-2.79-2.86-2.63
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