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Twin Disc Inc (NAS:TWIN)
Beneish M-Score
-2.74 (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 -2.74 suggests that the company is not a manipulator.

TWIN' s Beneish M-Score Range Over the Past 10 Years
Min: -3.19   Max: -2.25
Current: -2.74

-3.19
-2.25

During the past 13 years, the highest Beneish M-Score of Twin Disc Inc was -2.25. The lowest was -3.19. 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 * 0.9238+0.528 * 1.2796+0.404 * 1.8418+0.892 * 0.6256+0.115 * 1.0437
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.4205+4.679 * -0.0751-0.327 * 0.7748
=-2.74

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $25.4 Mil.
Revenue was 42.647 + 41.434 + 44.829 + 37.373 = $166.3 Mil.
Gross Profit was 11.182 + 9.618 + 11.606 + 8.19 = $40.6 Mil.
Total Current Assets was $125.0 Mil.
Total Assets was $213.9 Mil.
Property, Plant and Equipment(Net PPE) was $51.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $8.8 Mil.
Selling, General & Admin. Expense(SGA) was $57.1 Mil.
Total Current Liabilities was $36.1 Mil.
Long-Term Debt was $8.5 Mil.
Net Income was -5.518 + -0.963 + -2.301 + -4.323 = $-13.1 Mil.
Non Operating Income was -0.16 + -0.187 + -0.231 + 0.158 = $-0.4 Mil.
Cash Flow from Operations was 8.726 + -0.886 + -2.077 + -2.372 = $3.4 Mil.
Accounts Receivable was $43.9 Mil.
Revenue was 67.334 + 60.941 + 72.691 + 64.824 = $265.8 Mil.
Gross Profit was 19.534 + 19.006 + 22.103 + 22.389 = $83.0 Mil.
Total Current Assets was $169.8 Mil.
Total Assets was $249.9 Mil.
Property, Plant and Equipment(Net PPE) was $56.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $10.2 Mil.
Selling, General & Admin. Expense(SGA) was $64.3 Mil.
Total Current Liabilities was $57.1 Mil.
Long-Term Debt was $10.2 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)
=(25.363 / 166.283) / (43.883 / 265.79)
=0.15252912 / 0.16510403
=0.9238

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)
=(83.032 / 265.79) / (40.596 / 166.283)
=0.31239701 / 0.24413801
=1.2796

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 - (125.035 + 51.665) / 213.922) / (1 - (169.83 + 56.427) / 249.862)
=0.173998 / 0.09447215
=1.8418

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
=166.283 / 265.79
=0.6256

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))
=(10.161 / (10.161 + 56.427)) / (8.847 / (8.847 + 51.665))
=0.15259506 / 0.14620241
=1.0437

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)
=(57.112 / 166.283) / (64.264 / 265.79)
=0.34346265 / 0.24178487
=1.4205

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)
=((8.501 + 36.131) / 213.922) / ((10.231 + 57.054) / 249.862)
=0.20863679 / 0.26928865
=0.7748

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
=(-13.105 - -0.42 - 3.391) / 213.922
=-0.0751

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 -2.74 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

Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15Jun16
DSRI 0.86721.02180.88571.04721.03970.9070.9110.93841.08340.9238
GMI 0.94251.02621.14761.03670.7661.0151.21840.95830.9371.2796
AQI 0.86190.97021.28591.18790.75630.85170.91540.82090.94751.8418
SGI 1.30381.04570.89120.76971.36421.14650.80160.92511.00710.6256
DEPI 0.9811.08790.80460.89661.10240.9380.94150.9860.98471.0437
SGAI 0.97821.00291.02261.22220.94030.87371.15881.07310.94661.4206
LVGI 0.91450.99020.88870.86911.0160.8810.97420.88241.00160.7748
TATA 0.01620.0186-0.0022-0.13650.01680.0363-0.0741-0.0829-0.0271-0.0751
M-score -2.31-2.32-2.49-3.19-2.25-2.26-3.03-3.06-2.57-2.74

Twin Disc Inc Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.86910.93841.1261.17541.04431.08340.88031.06631.30140.9238
GMI 1.00050.95830.95420.93220.91760.9371.04251.09571.21931.2796
AQI 0.83270.82090.87860.7840.79750.94751.3961.37951.60121.8418
SGI 0.87170.92510.92720.99261.02161.00710.90860.77440.7020.6256
DEPI 0.95720.9860.98520.95790.95740.98471.01291.04681.06571.0437
SGAI 1.09061.07311.09481.00610.96780.94661.03231.18661.29831.4205
LVGI 0.93520.88241.01670.9850.9631.00160.92980.94310.8350.7748
TATA -0.1113-0.0829-0.0392-0.0247-0.0461-0.0271-0.0518-0.0299-0.0137-0.0751
M-score -3.30-3.06-2.71-2.56-2.75-2.57-2.71-2.56-2.16-2.74
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