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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 -1.93. The lowest was -3.30. And the median was -2.57.
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 * 1.0663||+||0.528 * 1.0957||+||0.404 * 1.3795||+||0.892 * 0.7744||+||0.115 * 1.0468|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1866||+||4.679 * -0.0299||-||0.327 * 0.9431|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|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.
Net Income was -2.301 + -4.323 + 0.437 + 2.946 = $-3.2 Mil.
Non Operating Income was -0.231 + 0.158 + -0.125 + 0.539 = $0.3 Mil.
Cash Flow from Operations was -2.077 + -2.372 + 1.56 + 6.056 = $3.2 Mil.
|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.
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)|
|=||(33.632 / 210.477)||/||(40.727 / 271.786)|
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)|
|=||(8.19 / 271.786)||/||(11.606 / 210.477)|
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 - (142.961 + 53.97) / 225.685)||/||(1 - (173.739 + 57.745) / 255.039)|
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))|
|=||(10.63 / (10.63 + 57.745))||/||(9.413 / (9.413 + 53.97))|
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)|
|=||(61.679 / 210.477)||/||(67.121 / 271.786)|
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)|
|=||((0.023 + 57.361) / 225.685)||/||((13.172 + 55.589) / 255.039)|
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|
|=||(-3.241 - 0.341||-||3.167)||/||225.685|
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.
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