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Twin Disc Inc (NAS:TWIN)
Beneish M-Score
-3.30 (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.

Twin Disc Inc has a M-score of -3.30 suggests that the company is not a manipulator.

TWIN' s 10-Year Beneish M-Score Range
Min: -3.3   Max: -1.93
Current: -3.3

-3.3
-1.93

During the past 13 years, the highest Beneish M-Score of Twin Disc Inc was -1.93. The lowest was -3.30. And the median was -2.60.


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 Twin Disc Inc 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 * 0.8691+0.528 * 1.0005+0.404 * 0.8327+0.892 * 0.8717+0.115 * 0.9572
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0906+4.679 * -0.1113-0.327 * 0.9352
=-3.30

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $33.5 Mil.
Revenue was 60.705 + 63.212 + 66.426 + 75.931 = $266.3 Mil.
Gross Profit was 16.528 + 18.544 + 20.667 + 20.623 = $76.4 Mil.
Total Current Assets was $183.2 Mil.
Total Assets was $275.8 Mil.
Property, Plant and Equipment(Net PPE) was $61.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $10.8 Mil.
Selling, General & Admin. Expense(SGA) was $66.7 Mil.
Total Current Liabilities was $55.8 Mil.
Long-Term Debt was $21.4 Mil.
Net Income was -0.475 + 0.518 + 1.277 + 0.047 = $1.4 Mil.
Non Operating Income was -0.068 + 0.119 + 0.034 + 0.533 = $0.6 Mil.
Cash Flow from Operations was -1.83 + 9.895 + 9.722 + 13.674 = $31.5 Mil.
Accounts Receivable was $44.2 Mil.
Revenue was 68.232 + 72.325 + 68.793 + 96.109 = $305.5 Mil.
Gross Profit was 17.674 + 22.311 + 19.416 + 28.246 = $87.6 Mil.
Total Current Assets was $190.1 Mil.
Total Assets was $295.1 Mil.
Property, Plant and Equipment(Net PPE) was $64.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $10.8 Mil.
Selling, General & Admin. Expense(SGA) was $70.1 Mil.
Total Current Liabilities was $57.3 Mil.
Long-Term Debt was $31.0 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)
=(33.489 / 266.274) / (44.204 / 305.459)
=0.12576894 / 0.14471337
=0.8691

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)
=(18.544 / 305.459) / (16.528 / 266.274)
=0.2869354 / 0.28677978
=1.0005

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 - (183.174 + 60.986) / 275.846) / (1 - (190.12 + 64.299) / 295.129)
=0.11486844 / 0.13793968
=0.8327

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
=266.274 / 305.459
=0.8717

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))
=(10.771 / (10.771 + 64.299)) / (10.753 / (10.753 + 60.986))
=0.14347942 / 0.14989058
=0.9572

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)
=(66.676 / 266.274) / (70.134 / 305.459)
=0.25040372 / 0.22960201
=1.0906

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)
=((21.422 + 55.786) / 275.846) / ((31.009 + 57.32) / 295.129)
=0.2798953 / 0.29928946
=0.9352

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
=(1.367 - 0.618 - 31.461) / 275.846
=-0.1113

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.

Twin Disc Inc has a M-score of -3.30 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.

Twin Disc Inc Annual Data

Jun04Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13
DSRI 1.01210.86691.33120.86721.02180.88571.04721.03970.9070.911
GMI 0.75050.98720.85960.94251.02621.14761.03670.7661.0151.2184
AQI 0.88680.9060.79410.86190.97021.28591.18790.75630.85170.9154
SGI 1.03621.1741.11361.30381.04570.89120.76971.36421.14650.8016
DEPI 1.08081.18541.11120.9811.08790.80460.89661.10240.9380.9415
SGAI 1.0311.02360.99730.97821.00291.02261.22220.94030.87371.1588
LVGI 1.13921.02291.16170.91450.99020.88870.86911.0160.8810.9742
TATA -0.0397-0.0312-0.01490.01620.0186-0.0022-0.13650.01680.0363-0.0741
M-score -2.84-2.63-2.34-2.31-2.32-2.49-3.19-2.25-2.26-3.03

Twin Disc Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 1.04230.94840.9070.75280.68660.76370.9110.96521.10280.8691
GMI 0.82850.90471.0151.11621.18661.26381.21851.11811.09391.0005
AQI 0.75320.68420.85170.88190.94961.1310.91540.86410.86610.8327
SGI 1.29131.28771.14651.03940.98410.85530.80160.8240.82290.8717
DEPI 1.00180.98170.9380.93120.98570.97560.94150.94520.94680.9572
SGAI 0.93430.90920.87370.95830.94791.07541.15881.09841.15891.0906
LVGI 1.07211.05610.8810.87570.83110.84870.97420.87560.90010.9352
TATA 0.07840.07970.0361-0.002-0.0497-0.0839-0.0741-0.1058-0.1156-0.1113
M-score -2.02-2.08-2.26-2.63-2.87-2.99-3.03-3.14-3.09-3.30
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