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GuruFocus has detected 5 Warning Signs with Twin Disc Inc $TWIN.
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Twin Disc Inc (NAS:TWIN)
Beneish M-Score
-2.90 (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 -2.90 suggests that the company is not a manipulator.

TWIN' s Beneish M-Score Range Over the Past 10 Years
Min: -3.3   Max: -1.93
Current: -2.9

-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 -2.62.


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 * 0.9261+0.528 * 1.0937+0.404 * 1.5173+0.892 * 0.7297+0.115 * 1.0389
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1623+4.679 * -0.0864-0.327 * 0.816
=-2.90

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $22.7 Mil.
Revenue was 33.672 + 35.835 + 42.647 + 41.434 = $153.6 Mil.
Gross Profit was 8.949 + 9.173 + 11.182 + 9.618 = $38.9 Mil.
Total Current Assets was $114.7 Mil.
Total Assets was $202.4 Mil.
Property, Plant and Equipment(Net PPE) was $48.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $8.1 Mil.
Selling, General & Admin. Expense(SGA) was $52.3 Mil.
Total Current Liabilities was $34.2 Mil.
Long-Term Debt was $7.8 Mil.
Net Income was -2.912 + -2.696 + -5.518 + -0.963 = $-12.1 Mil.
Non Operating Income was 0.456 + -0.11 + -0.16 + -0.187 = $-0.0 Mil.
Cash Flow from Operations was 0.222 + -2.661 + 8.726 + -0.886 = $5.4 Mil.
Accounts Receivable was $33.6 Mil.
Revenue was 44.829 + 37.373 + 67.334 + 60.941 = $210.5 Mil.
Gross Profit was 11.606 + 8.19 + 19.534 + 19.006 = $58.3 Mil.
Total Current Assets was $143.0 Mil.
Total Assets was $225.7 Mil.
Property, Plant and Equipment(Net PPE) was $54.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $9.4 Mil.
Selling, General & Admin. Expense(SGA) was $61.7 Mil.
Total Current Liabilities was $57.4 Mil.
Long-Term Debt was $0.0 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)
=(22.727 / 153.588) / (33.632 / 210.477)
=0.1479738 / 0.15978943
=0.9261

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)
=(58.336 / 210.477) / (38.922 / 153.588)
=0.27716092 / 0.25341824
=1.0937

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 - (114.701 + 48.59) / 202.422) / (1 - (142.961 + 53.97) / 225.685)
=0.19331397 / 0.12740767
=1.5173

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
=153.588 / 210.477
=0.7297

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))
=(9.413 / (9.413 + 53.97)) / (8.104 / (8.104 + 48.59))
=0.14850985 / 0.14294282
=1.0389

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)
=(52.315 / 153.588) / (61.679 / 210.477)
=0.34061906 / 0.2930439
=1.1623

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)
=((7.782 + 34.218) / 202.422) / ((0.023 + 57.361) / 225.685)
=0.20748733 / 0.2542659
=0.816

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
=(-12.089 - -0.001 - 5.401) / 202.422
=-0.0864

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 -2.90 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 local exchange's 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

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.1261.17541.04431.08340.88031.06631.30140.92381.19090.9261
GMI 0.95420.93220.91760.9371.04251.09571.21931.27961.14431.0937
AQI 0.87860.7840.79750.94751.3961.37951.60121.84181.33831.5173
SGI 0.92720.99261.02161.00710.90860.77440.7020.62560.69120.7297
DEPI 0.98520.95790.95740.98471.01291.04681.06571.04371.03961.0389
SGAI 1.09481.00610.96780.94661.03231.18661.29831.42051.23641.1623
LVGI 1.01670.9850.9631.00160.92980.94310.8350.77480.81780.816
TATA -0.0392-0.0247-0.0461-0.0271-0.0518-0.0299-0.0137-0.0751-0.0653-0.0864
M-score -2.71-2.56-2.75-2.57-2.71-2.56-2.16-2.74-2.65-2.90
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