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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.
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.
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|
|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
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)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(83.032 / 265.79)||/||(40.596 / 166.283)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|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)|
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.
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))|
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)|
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)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(-13.105 - -0.42||-||3.391)||/||213.922|
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.
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
Twin Disc Inc Annual Data
Twin Disc Inc Quarterly Data