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Twin Disc Inc (NAS:TWIN)
Beneish M-Score
-2.56 (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 -2.56 suggests that the company is not a manipulator.

TWIN' s 10-Year Beneish M-Score Range
Min: -3.3   Max: -1.93
Current: -2.56

-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 * 1.1754+0.528 * 0.9322+0.404 * 0.784+0.892 * 0.9926+0.115 * 0.9579
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0061+4.679 * -0.0247-0.327 * 0.985
=-2.56

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $40.7 Mil.
Revenue was 72.691 + 64.824 + 73.566 + 60.705 = $271.8 Mil.
Gross Profit was 22.103 + 22.389 + 21.515 + 16.528 = $82.5 Mil.
Total Current Assets was $173.7 Mil.
Total Assets was $255.0 Mil.
Property, Plant and Equipment(Net PPE) was $57.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $10.6 Mil.
Selling, General & Admin. Expense(SGA) was $67.1 Mil.
Total Current Liabilities was $55.6 Mil.
Long-Term Debt was $13.2 Mil.
Net Income was 3.747 + 4.043 + 2.324 + -0.475 = $9.6 Mil.
Non Operating Income was 0.142 + 0.34 + -0.061 + -0.068 = $0.4 Mil.
Cash Flow from Operations was 9.065 + 0.379 + 7.962 + -1.83 = $15.6 Mil.
Accounts Receivable was $34.9 Mil.
Revenue was 63.212 + 66.426 + 75.931 + 68.232 = $273.8 Mil.
Gross Profit was 18.544 + 20.667 + 20.623 + 17.674 = $77.5 Mil.
Total Current Assets was $181.1 Mil.
Total Assets was $274.5 Mil.
Property, Plant and Equipment(Net PPE) was $61.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $10.7 Mil.
Selling, General & Admin. Expense(SGA) was $67.2 Mil.
Total Current Liabilities was $57.7 Mil.
Long-Term Debt was $17.4 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)
=(40.727 / 271.786) / (34.907 / 273.801)
=0.14984951 / 0.1274904
=1.1754

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)
=(22.389 / 273.801) / (22.103 / 271.786)
=0.28308151 / 0.30367642
=0.9322

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 - (173.739 + 57.745) / 255.039) / (1 - (181.087 + 61.1) / 274.529)
=0.09235842 / 0.11780905
=0.784

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
=271.786 / 273.801
=0.9926

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))
=(10.691 / (10.691 + 61.1)) / (10.63 / (10.63 + 57.745))
=0.14891839 / 0.15546618
=0.9579

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)
=(67.121 / 271.786) / (67.211 / 273.801)
=0.24696268 / 0.2454739
=1.0061

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)
=((13.172 + 55.589) / 255.039) / ((17.422 + 57.721) / 274.529)
=0.26960975 / 0.27371607
=0.985

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
=(9.639 - 0.353 - 15.576) / 255.039
=-0.0247

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 -2.56 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

Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14
DSRI 0.86691.33120.86721.02180.88571.04721.03970.9070.9110.9384
GMI 0.98720.85960.94251.02621.14761.03670.7661.0151.21840.9583
AQI 0.9060.79410.86190.97021.28591.18790.75630.85170.91540.8209
SGI 1.1741.11361.30381.04570.89120.76971.36421.14650.80160.9251
DEPI 1.18541.11120.9811.08790.80460.89661.10240.9380.94150.986
SGAI 1.02360.99730.97821.00291.02261.22220.94030.87371.15881.0731
LVGI 1.02291.16170.91450.99020.88870.86911.0160.8810.97420.8824
TATA -0.0312-0.01490.01620.0186-0.0022-0.13650.01680.0363-0.0741-0.0829
M-score -2.63-2.34-2.31-2.32-2.49-3.19-2.25-2.26-3.03-3.06

Twin Disc Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.75280.68660.76370.9110.96521.10280.86910.93841.1261.1754
GMI 1.11621.18661.26381.21851.11811.09391.00050.95830.95420.9322
AQI 0.88190.94961.1310.91540.86410.86610.83270.82090.87860.784
SGI 1.03940.98410.85530.80160.8240.82290.87170.92510.92720.9926
DEPI 0.93120.98570.97560.94150.94520.94680.95720.9860.98520.9579
SGAI 0.95830.94791.07541.15881.09841.15891.09061.07311.09481.0061
LVGI 0.87570.83110.84870.97420.87560.90010.93520.88241.01670.985
TATA -0.002-0.0497-0.0839-0.0741-0.1058-0.1156-0.1113-0.0829-0.0392-0.0247
M-score -2.63-2.87-2.99-3.03-3.14-3.09-3.30-3.06-2.71-2.56
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